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    Mathematical Problems

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    Madhav Lamichhane
    1. For the given demand and cost functions, profit is maximized at an output of 3 units where price is $17, revenue is $51, and profit is $16. Revenue is maximized at an output of 10 units where price is $10 but results in a loss of $82. Revenue is maximized with a profit constraint of $8 at an output of 5 units where price is $15, revenue is $75, and profit is $8. 2. Given a different total revenue, demand, and cost function: a) Profit is maximized at an output of 8 units where price is $12 and profit is $14. b) Revenue is maximized at an

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    Mathematical Problems

    Uploaded by

    Madhav Lamichhane
    45 views7 pages
    1. For the given demand and cost functions, profit is maximized at an output of 3 units where price is $17, revenue is $51, and profit is $16. Revenue is maximized at an output of 10 units where price is $10 but results in a loss of $82. Revenue is maximized with a profit constraint of $8 at an output of 5 units where price is $15, revenue is $75, and profit is $8. 2. Given a different total revenue, demand, and cost function: a) Profit is maximized at an output of 8 units where price is $12 and profit is $14. b) Revenue is maximized at an

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    Mathematical Problems in demand forecasting

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    1. For the given demand and cost functions, profit is maximized at an output of 3 units where price is $17, revenue is $51, and profit is $16. Revenue is maximized at an output of 10 units where price is $10 but results in a loss of $82. Revenue is maximized with a profit constraint of $8 at an output of 5 units where price is $15, revenue is $75, and profit is $8. 2. Given a different total revenue, demand, and cost function: a) Profit is maximized at an output of 8 units where price is $12 and profit is $14. b) Revenue is maximized at an

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    45 views7 pages

    Mathematical Problems

    Uploaded by

    Madhav Lamichhane
    1. For the given demand and cost functions, profit is maximized at an output of 3 units where price is $17, revenue is $51, and profit is $16. Revenue is maximized at an output of 10 units where price is $10 but results in a loss of $82. Revenue is maximized with a profit constraint of $8 at an output of 5 units where price is $15, revenue is $75, and profit is $8. 2. Given a different total revenue, demand, and cost function: a) Profit is maximized at an output of 8 units where price is $12 and profit is $14. b) Revenue is maximized at an

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    Surya Carpet Ltd has the following demand and cost

    function:
    P=20-Q C= Q2+8Q+2.
    Find Price, output, revenue and total profit of this
    company under the following objectives
    a) Profit maximization
    b) Sales revenue maximization
    c) Sales revenue maximization with a profit
    constraint 8.

    Profit maximization P=20-Q C= Q2+8Q+2. π=TR-


    TC, TR= P×Q
    Sol: P=20-Q C= Q2+8Q+2.
    TR= P×Q=(20-Q )Q= 20Q-Q2
    π=TR-TC
    =20Q-Q2-( Q2+8Q+2)
    =20Q-Q2- Q2-8Q-2
    = 12Q-2 Q2-2
    a) Profit maximization

    12-4Q-0=0
    -4Q=-12
    Q=3
    So, P=20-Q = 20-3=17
    TR= P×Q= 17×3=51
    π =12Q-2 Q2-2 =12×3-2×32-2=16
    b) For sales revenue maximization

    20-2Q=0
    Q=10
    P=20-Q = 20-10=10
    TR= P×Q=10×10=100
    π =12Q-2 Q2-2 =12×10-2×102-2= -82 (loss)
    c) Sales revenue maximization with a profit constraint
    8
    π=8
    12Q-2 Q2-2=8
    12Q-2 Q2-10=0
    -2(Q2-6Q+5)=0
    Q2-6Q+5=0
    Q2-5Q-Q+5=0
    (Q-5)(Q-1)=0 Either Q=1 or Q=5
    When Q=1, P= 19 and TR= P×Q= 19
    When Q=5, P= 15, TR= 15×5=75
    Total Revenue is Maximum when Q=5 and P= 15
    Where TR= 75 and Profit π=8.
    2. Given the total revenue, demand function and
    total cost function TR= 20Q-Q2, P= 20- Q and
    TC= 50+4Q. Determine the price (P), output (Q) and
    total cost (π ) under the objective of the firm:
    a) Profit maximization
    b) Sales revenue maximization and
    c) Sales revenue maximization with profit constraint
    13.

    Soln
    P= 20- Q
    TR= 20Q-Q2
    TC= 50+4Q
    Profit (π)= TR- TC
    = 20Q-Q2-(50+4Q)
    = 20Q-Q2-50-4Q
    = 16Q-Q2-50
    d) For profit maximization
    16-2Q-0=0
    -2Q=-16
    Q=8
    So, P=20-Q = 20-8=12
    π = 16Q-Q2-50=16×8-82-50=14

    b) For sales revenue maximization

    20-2Q=0
    Q=10
    P=20-Q = 20-10=10
    π =16Q- Q2-50 =16×10-102-50= 10 (Profit)

    d) C) For Sales revenue maximization with profit


    constraint 13.
    π=13
    16Q-2 Q2-2=13
    16Q-2 Q2-15=0
    e) -2(Q2-6Q+5)=0
    f) Q2-6Q+5=0
    g) Q2-5Q-Q+5=0
    h) (Q-5)(Q-1)=0 Either Q=1 or Q=5
    i) When Q=1, P= 19 and TR= P×Q= 19
    j) When Q=5, P= 15, TR= 15×5=75
    k) Total Revenue is Maximum when Q=5 and P= 15
    Where TR= 75 and Profit π=8.

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