In: Economics
Consider a team that chooses attendance Q(measured in millions) to maximize profit. Let the inverse demand curve be
P = 100 – 20Q
which has the associated marginal revenue function equal to
MR = 100 – 40Q
Also, let the total cost function be given by
TC = 50 + 4Q
for which the marginal cost is MC= 4. Find the team’s optimal output, price, and profit.