21 A manufacturer estimates that its variable cost for manuf

21 A manufacturer estimates that its variable cost for manufacturing a given product is given by the following expression: C(q) 25q, + 2000q [$] where C is the total cost and q is the quantity produced a. Derive an expression for the b. Derive expressions for the revenue and the profit when the widgets are sold at marginal cost.

Solution

a) MC is first order derivative of TC function. So,

MC = 50q + 2000

b) Since, price is equal to MC

P = 50q + 2000

TR = P * q = 50q² + 2000q

Profit = TR - TC

= 50q² + 2000q - 25q² - 2000q

= 25q²