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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.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M940845

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