Question

Let’s say we have a market demand curve given by the following equation:

q=10000-200p

Let’s say we need to maximize the profit:

So we have revenue function f(p) and cost function given by 1p

So profit, pi(p) = f(p) + pq

We can find the value of p at which this can be maximum by differentiating pi(p) and making it equal to zero. To find whether it is maximum value , we again do the derivative and check whether it is negative, if negative then pi(p) is maximum at the optimal value obtained by solving pi'(p) = 0

Answer 1