the Arc Lamp Company, a producer of old style oil lamps, estimated the following demand function for its product:
Q=120,000-10,000P
where Q is the quantity demanded per year and P is the price per lamp. The firm fixed costs are $12,000 and variable costs are $1.50 per lamp.
a) write an equation for the total revenue functions in terms of Q
b) specify the marginal revenue function
c) write an equation for the total cost function in term of Q
d) specify the marginal costs function
e) write an equation for total profit in term of Q. At what level of output are total profits maximised? What price will be charged? What are total profit at this output level?
f) check your answer in part (e) by equating the marginal revenue and marginal costs function, determined in parts (b) and (d), and solving for Q.
g) what model of market pricing behavior has been assumed in this problem? Explain