Firm's maximum profits are 40
Profit = revenue - cost
Revenue = price x quantity = 40 x quantity
Cost = 60 + 4 x quantity x quantity
So you have:
P = 40 x Q - 60 - 4 x Q x Q
To get the maximum value for P with respect to Q, differentiate and set it to 0.
That is, set dP/dQ = 0 and solve for Q.
Since P(Q) is quadratic, dP/dQ is linear, so solving dP/dQ = 0 is easy and there is one solution.
Q=5
revenue = 5 x 40 = 200
cost = 60 + 4 x 5 x 5 = 60 + 4 x 25 = 160
Profit = 200 - 160 = 40
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