# Given a firm's demand function, P = 24 - 0.5Q and the average cost function, AC = Q2 8Q + 36 +...

## Question:

Given a firm s demand function, P = 24 - 0.5Q and the average cost function, AC = Q2 8Q + 36 + 3/Q, calculate the level of output Q which

a. Maximizes total revenue

b. Maximizes profits

## Profit Maximization:

Profit is maximized when the marginal revenue of producing an additional unit of production equals the marginal cost of production that extra unit.

## Answer and Explanation: 1

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View this answera. Maximizes total revenue

- {eq}R = PQ = 24Q - 0.5 Q^2 \\ R'=MR=24-Q=0 → Q^*=24 {/eq}

b. Profit is maximized when MR = MC

- {eq}AC = Q^2 - 8Q +...

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Chapter 24 / Lesson 6Learn the profit maximization definition, its importance, and explore the profit maximization theory. See how to calculate profit maximization with examples.

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