The market demand and supply functions for some commodity Q have been estimated (this market is assumed to be perfectly competitive.), respectively,…

The market

demand and supply functions for some commodity Q have been estimated (this market is assumed to be

perfectly competitive.), respectively, as:

QD= 20,000 -400P.

QS= 5,000 + 600P.

where P is the price (dollars per unit) and Q is the rate of sales (output per month).

Consider a single firm in this market which has a total cost function given as:

TC = 500 + 25q -5q^2+ (2/3)q^3

where q is the firm’s output level.

What is this firm’s profit maximizing level of output? What are its profits?

Numbers expected

.

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