Key Concepts in Economics: Profit Maximization, Demand and Supply Analysis, and Profit Calculation

Economics
Name of the student
Name of the university
Author note

Answer 1
a) For maximizing profit in case of a perfectly competitive market, the marginal revenue
of the perfectly competitive firm will be equal to the marginal cost of the firm.
b) Since, it is known that in case of profit maximization the marginal revenue is also the
price which is also equal to the marginal cost. Therefore, when the price of pizza is
$3.50 per slice, the profit maximizing level of output will be 400 since MC equals
price at that point.
Answer2
P = 80-Q/2
Now TR = P *Q
TR = (80 – Q/2) Q
TR = 80Q – Q2/ 2
Therefore, MR = dTR/dQ = 80 – Q
Given, MC =Q
Diagrams for a) and b)

c)
Since, MR =80-Q and MC=Q
MR=MC
80-Q = Q
Q = 40
Now, P = 80- Q/2
P = 80-40/2
P = 60
d)
Profit = revenue – cost
Here revenue = P*Q = 60*40 = $2400