The World's Only Manufacturer of Left-Handed Widgets Has Determined That

question 56

Short Answer

The world's only manufacturer of left-handed widgets has determined that if q left-handed widgets are manufactured and sold per year at price p, then the cost function is , and the manufacturer's revenue function is . The manufacturer also knows that the demand function for left-handed widgets is .
A. Write the profit function in terms of price p.
B. Sketch the profit function to determine what price yields the largest profit. What is that price?

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Definitions:

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or units sold, including expenses like rent, wages, and insurance premiums.

Short Run

A period in economic analysis where at least one factor of production is fixed, limiting adjustments to changes in demand or supply.

Long Run

A period in economics sufficient for all markets to reach equilibrium, where all inputs and outputs can be varied by firms, not constrained by existing physical capital.