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Derive total revenue function and marginal revenue

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Reference no: EM132502784

Tunggal Sdn Bhd is a monopolist. The demand function for its product is estimated to be:

Q = 60 - 0.4P + 6Y + 2A

where,

Q = quantity of units sold

P = price per unit

Y = per capita disposable personal income ($)

A = advertising expenditures ($)

The firm's average cost function is:

AVC = Q2 - 10Q + 60

Y is $3 and A is $3 for the period being analysed.

i. If fixed costs are equal to $1,000, derive the firm's total cost function and marginal cost function.

ii. Derive total revenue function and marginal revenue function for the firm.

iii. Calculate the profit-maximising level of price and output for Tunggal Sdn Bhd.

iv. What profit or loss will Tunggal Sdn Bhd earn?

v. If fixed costs were $1,200, how would your answers change for (i) through (iv)?

Reference no: EM132502784

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