Solving a Numerical or Profit Maximization in Perfect Competition
Introduction: Firm PQR produces a product 'Alpha' under perfect competition market conditions. The cost function for the firm is:
TC = 1500 + 200 Q + Q2
The market supply and demand equations for the product 'Alpha' in the perfect competition market are:
QS = 40,000 + 60 P
QD = 80,000 - 40 P
Task: Based on the information given above, calculate:
a) The profit maximizing output for PQR.
b) The economic profits earned by PQR.
c) Is the industry for product 'Alpha' in equilibrium?
Please provide a step-by-step calculation to show how you arrived at the answer.