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A firm has a revenue function of R(Q) = 110Q – 6Q2and a cost function of...

  1. A firm has a revenue function of R(Q) = 110Q – 6Q2and a cost function of C(Q) = 50 + 20Q + 0.5Q2.

a) Calculate the profit maximizing quantity by using the first derivative of the profit function method. 2 points

e) Assume the government imposes an fixed setup cost of $50 on the firm. What will the firm’s profit maximizing quantity be? 1 point

f) Assume the firm will have the following current and future flows of profit: $150 today, $140 in 1 year and $180 in 2 years. With the interest rate at 8%, what is the present value (PV) of these profit flows? 2 points

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