Question: A firm estimates that it faces a demand curve with approximately the following relationship between price (P) in and quantity sold (Q): P =

A firm estimates that it faces a demand curve with approximately the following relationship between price (P) in £ and quantity sold (Q):

P = 100 – 0.01Q

Fixed costs are £40,000 and variable costs are £40 per unit.

  • Find formulae for Total Revenue (TR) and Total Cost (TC)
  • Find the formula for Profit (?)
  • Find the breakeven quantities and hence the profit-maximizing quantity

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