Problem: Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one very large firm-Tile King. Ajax produces a multi-headed tunnel wall scrubber that is very similar to a model produced by Tile King. Ajax has decided to charge the same price as Tile King to avoid the possibility of a price war. The price charged by tile King is $20,000.
Ajax has the following short-run cost curve:
TC = 800,000 - 5,000 Q + 100 Q2
a. Compute the marginal cost curve for Ajax
b. Given Ajax's pricing strategy, what is the marginal revenue function for Ajax?
c. Compute the profit-maximizing level of output for Ajax
d. Compute Ajax's total dollar profits.