Calculate profit maximizing output level , Microeconomics


You are the sales manager at SoftSystem, a dominant firm that produces operating system. The new operating system, Doors XR, has been newly developed. Its demand is estimated that:

Q = 100,000 - 200P

 (i)    As a sales manager you want to maximize the total revenue. How much do you want to charge for the Doors XR?

The cost function for Doors XR is given by

1093_cost function for Doors.png

(ii)   Your colleague, the production manager argues that his job is to minimize the average total cost. What output level of Q does the production manager want to choose? What is the difference in the output level between what you (the sales manager) want to sell and the production manager wants to produce?

(iii)   For the stockholders (and CEO) of SoftSystem, profit maximization is the best interest. What is the profit maximizing output level of the new product?



Posted Date: 2/15/2013 1:55:42 AM | Location : United States

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