What condition holds when the firm is maximizing profits

Assignment Help Macroeconomics
Reference no: EM13180029

A firm's profit ?(Q) is the difference between its revenue R(Q) and costs C(Q)..

(a) What condition holds when the firm is maximizing profits? Explain in words what the math of the answer means.

(b) What conditions do the functions R(Q) and C(Q) have to satisfy for you to know that the quantity Q* that satisfies the condition in (a) in fact maximizes profit? Why might you expect this to be true most of the time?

(c) Derive the condition that holds when average cost C(Q)/Q is minimized. What condition on C(Q) ensures that the average cost is minimized where this condition holds?

(d) In general, will the condition in (a) hold when the firm is minimizing average cost? Why or why not? From (c), what would marginal revenue R'(Q*) have to equal at Q* for average cost to be minimized for the same quantity Q* where profits are maximized?

Reference no: EM13180029

Questions Cloud

What is the probability that a bolt will have a diameter : A machine produces bolts with an average diameter of 0.30 inches and a standard deviation of 0.01 inches. What is the probability that a bolt will have a diameter greater than 0.32 inches? Assume the distribution is normal.
Position analysis questionnaire : Which of the following is one of the categories of job elements in the Position Analysis Questionnaire (PAQ)? a. information input b. data c. knowledge d. compensable factors
How much will she spend on clothes each month : Griselda budgets 45 per month before sales tax for clothes. How much will she spend on clothes each month if she is charged 6 sales tax?
State what is the vapor pressure in mmhg of a solution : What is the vapor pressure in mmHg of a solution prepared by dissolving 5.00g of benzoic acid (C7H6O2) in 100g of ethyl alcohol (C2H6O) at 35 C?
What condition holds when the firm is maximizing profits : What condition holds when the firm is maximizing profits? Explain in words what the math of the answer means. (b) What conditions do the functions R(Q) and C(Q) have to satisfy for you to know that the quantity Q* that satisfies the condition in (..
What was the approximate revenue from the sale of the shoes : If the company's revenue from the sale of the shoes in 2006 was $3.0 million, what was the approximate revenue from the sale of the shoes in 2005?
Analysing a service contract using simulation : What is the probability that there will be 4 claims or fewer per day and analysing a service contract using simulation
State the effect on calculated concentration of naoh : what would be the effect on your calculated concentration of NaOH, if, unbeknownst to you, someone left the KHP out and it absorbed water?
State ethanol is slightly acidic and reacts with naoh : Describe how the results from this control experiment would be incorporated into the data analysis to the correct for this error.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Describe the maximum insurance premium

Describe the maximum insurance premium that the individual is prepared to pay.

  Suppose the costs also benefits incur at the end of the year

Suppose the costs also benefits incur at the end of the year, should the city buy the trucks.

  Create keynesian cross diagram

Assume that initially the goods and services market is in equilibrium at potential of output and that the government budget is balanced,

  Question on pricing strategy

Movie theaters generally charge the same ticket price for all movies with evening show times, regardless of popularity. This pricing strategy causes surpluses for unpopular films & shortages for popular films.

  Illustrate how can production functions isoquant

Illustrate how can production functions, isoquant and isocost analysis, and other tools of microeconomics help decide the best path for the company to pursue.

  Hurricane katrina effect on the equilibrium price level

Hurricane Katrina was a natural disaster that would have had an impact in the United State economy. What effect would Hurricane Katrina have on aggregate demand or aggregate supply, other things being steady?

  Make a schedule showing total product average product

Make a schedule showing total product, average product of labor, and marginal product of labor using a range of labor inputs

  Determine profit level with the cournot quantity

Assume the market demand curve in an industry is characterized by P=1-Q, where P is the market price and Q is the total quantity supplied to the market. Assume there are three firms in this industry.

  Economic statements about purely competitive firms

Assume that a price support system for cotton requires the federal government to pay farmers $3,000 for each acre to not plant cotton. How would you shift either the supply or demand curve for cotton to describe the effect of this action? In your a..

  Currently one argument against the continuation of state

Currently one argument against the continuation of state regulation of insurance and one argument.

  Equilibrium level of output and local bookstore sales

Derive the book supply curve where price is expressed as a function of output. Calculate the equilibrium level of output and local bookstore sales revenue.

  Classifying utility functions as risk averse

Classify the following utility functions as risk averse, risk neutral or risk seeking and draw the relevant diagrams

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd