Gatheru and Kabiru Certified Public Accountants have recently started to give business advise to their
clients. Acting as consultants, they have estimated the demand curve of a clients firm to be;
AR=200-8Q
Where AR is average revenue in millions of shillings and Q is the output in units.
Investigation of the client firm’s cost profile shows that marginal cost (MC) is given by:
MC=Q2-28Q+211(In million shillings)
Further investigations have shown that the firm’s cost when not producing output is sh.10 million.
Required:
i) The equation of total cost
ii) The equation of total revenue
iii) An expression for profit.
iv) The level of output that maximizes profit
v) The equation of marginal revenue.