Answer to Question #41650 in Microeconomics for Manisha
Calculate the profit maximizing price and quantity of manuals
Profit maximizing quantity of manuals can be found in the point, where marginal revenue equals marginal cost (MR = MC) and the price can be found from the demand curve at this quantity.
MC = TC' = 12.5
MR = TR' = (P*Q)' = ((25,000/Q)^0.5*Q)' = (158.11Q^0.5)' = 79.06/Q^0.5
MR = MC, so:
79.06/Q^0.5 = 12.5
Q = (79.06/12.5)^2 = 40 units - profit-maximizing quantity
P = (25,000/40)^0.5 = $25 - profit-maximizing price.
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