has multiple parts Assume that a company sells widgets and the demand equation i
ID: 1220509 • Letter: H
Question
has multiple parts
Assume that a company sells widgets and the demand equation is given by: p = -0.01q + 50. Also, assume that the cost (in dollars) of producing q widgets is given by C(q) = 3000-20q+0.03g^2 Calculate the Revenue function, R(q). b. Calculate the Marginal Revenue function. c. Calculate the Marginal Revenue at 1, 000 units and interpret what it means using a complete sentence. d. Calculate the Marginal Cost function. e. Calculate the Marginal Cost at 1, 000 units and interpret what it means using a complete sentence.Explanation / Answer
ans a)
p= - 0.01q +50
R(q) = p*q = -0.01 q2 + 50q
b)
Marginal revenue , MR = dR/dq = -0.02q + 50
c) at q=1000
MR= -0.02q + 50 = - 0.02(1000) + 50 = -20+ 50 = 30
marginal revenue at q=1000 is 30 , which means revenue will change by 30 if output changes by 1 at q=1000
d) C(q)= 3000- 20q +0.03 q2
MC= dC/dq = -20+ 0.06q
e) at q=1000
MC= -20+ 0.06q = -20+ 0.06(1000) = 40
marginal cost at q=1000 is 40 , which means cost will change by 40 if output changes by 1 at q=1000
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