The quantity and the price of <em>computers</em> that should be produced to maximize the firm’s profits are 78 units and 330.50 respectively.
The weekly demand for computers is given as: Q = 1,400 − 4P
Therefore, the inverse weekly demand for computers will be: P = 350 - 0.25Q
The total revenue will be gotten by multiplying the <u>price and quantity</u>. This will be: TR = (350 - 0.25Q)Q = 350Q - 0.25Q²
Therefore, marginal revenue will be:
MR = 350 - 0.5Q
The <em>weekly cost </em>of producing computers is C(Q) = 1,200 + 2Q² Therefore, the marginal cost will be:
MC = 4Q
The <em>profit maximizing condition</em> will be:
MR = MC
350 - 0.5Q = 4Q
4.5Q = 350
Q = 77.78 = 80 approximately
The quantity produced should be 80 units.
Since<em> P = 350 - 0.25Q</em>
P = 350 - 0.25(78)
P = 350 - 19.50
P = 330.50
The price is 330.50
Therefore, the <em>long-run adjustment </em>that should be anticipated is the entry by other firms, reducing your profits.
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