anonymous
  • anonymous
A producer finds that demand for his commodity obeys a linear equation p+.5x=5.5, where p is in thousands of dollars and x is in thousands of units. If the producer's cost are given C(x)=3+1x, what should his level of production be to maximize profits? 16 minutes ago
Mathematics
schrodinger
  • schrodinger
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anonymous
  • anonymous
ok, to maximize profits, set P = MC (for perfectly competitive market). So you have, p =5.5-.5x = 1= MC. Now solve for x, 5.5 = 1 +.5x, x = 9. So produce 9 units.

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