Question

1. Firm Appledox, a producer of Microchips, has no cost of production, but has the following Price Function:

                                           P = 500 - 5P

1. Calculate the revenue-maximizing output.
2. Calculate Price at revenue-maximizing output.

Answer 1

Solution:-

Given that

A producer of Microchips, has no cost of production, but has the following proce function:

P = 500 - 5Q

a)

Revenue (TR) = P. Q

  

Max TR

So,

b)

Now price at Revenue max

Thus equation

price at revenue Max,  

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