The Lumins Lamp Company, a producer of old-style oil lamps, estimated the following demand function for its products:
Q = 120,000 - 10,000P
a) Write an equation for the total revenue function in terms of Q
b) Specify the marginal revenue function
c) Write an equation for the total cost function in terms of Q
d) Specify the marginal cost function
e) Write an equation for the total profits in terms of Q. At what level of output are total profits maximized? What price will be charged? What are total profits at this output level?
f) Check the answer in Part e by equating the marginal revenue and marginal cost functions, determined in Parts b and d, and solving for Q
g) What model of marketing pricing behavior has been assumed in this problem?