Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The function of the dependence of total costs (T) on the volume of output (Q) for a company operating in conditions of perfect competition is

The function of the dependence of total costs (T) on the volume of output (Q) for a company operating in conditions of perfect competition is described by the formula:

= 2Q2 + 6Q + 10

a. Determine the production output that maximizes the profits of the company, and the amount of profit itself, if the unit price of its products is $ 46.

b. The state imposes a lump sum tax of $ 100 on this company. Will the volume of output maximizing the profit of the company and the amount of profit, if the price of the product is still equal to $ 46, change in this case? Prove your point.

c. Let the state instead of a lump-sum tax introduce a quantitative tax on the products of a company with a tax rate of t = $ 4. In this case, will the output volume maximizing the profit of the company and the amount of profit change? If so, how much?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

World Economic And Social Survey 2012 In Search Of New Development Finance

Authors: United Nations Department Of Economic And Social Affairs

1st Edition

9210555112, 9789210555111

More Books

Students also viewed these Economics questions