Comet Cleaning Products is a medium sized firm operating in an industry dominated by Tile Queen. Comet produces a multi-headed tunnel wall scrubber that is similar to a model produced by Tile Queen. Comet decides to charge the same price as Tile Queen to avoid the possibility of a price war. The price charge by Tile Queen is $18,000. Ajax has the following short run total cost and marginal cost curves:
TC = 900,000 - 6,000 Q + 50 Q2
MC= -6,000 +100 Q
a) Given Comet's price strategy, what is its marginal revenue (MR) function? (Hint: When price (P) is constant, MR = P)
b) Compute the profit-maximizing output level for Comet.
c) Compute Comet's total dollar profits.