Assume you are the manager of a watch making firm operating into a competitive market. Your cost of production is specified by C = 100 + Q2, Here Q is the level of output and C is net cost. (The marginal cost of production is 2Q. The fixed cost of production is equal to $100.) If the price of watches is $60, how several watches should you produce to maximize profit?
Profits are maximized where marginal cost is equivalent to marginal revenue. Here, marginal revenue is equivalent to $60; recall that price equals marginal revenue in a competitive market:
60 = 2Q, or Q = 30.