A firm faces the following average revenue (demand) curve:
P = 120 - 0.02Q
Where Q is weekly production and P is price, measured in ₹ per unit. The firm’s cost function is given by C = 60Q + 25,000.
Assume that the firm maximizes profits.
(i) What is the level of production, price, and total profit per week?
(ii) If the government decides to levy a tax of ₹14 per unit on this product, what will be the new level of production, price, and profit?
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