isi2010

[ritu]

1.A firm can produce a product at a constant average cost of rs 4.the demand is givn by x=100-10p...assume that firm Requires a profit of rs 80..determine the level of output nd price that yields max revenue if this profit constraint is to br fulfilled....


2.pls if smbdy could discuss question 5 also ....
Both questions are from me ii ISI 2010

[neha]

solution 1:

I think it should be done as follows:

The profit equation will be
   x^2 -60x+800 =0 which gives x=20 or x=40,,,
Now the revenue equation is
               TR(x)= (100-x)x/100
             
Since there are only two values of x for which the profit constraint is satisfied,,,
       TR(20)=160 and TR(40)=240,, so the revenue is maximum when x is 40 so price will be 6 per unit...