Question: The demand and cost function of a firm is given respectively by: P = 100 – 4q and C = 50 + 4q. The firm chooses quantity q to maximize revenue subject to the constraint that profit = $334.

a. Find the revenue maximizing q and the price at which the firm would sell this output. Show that SOC is satisfied.

b. Find the output q and price if the firm was a profit maximizing firm.

c. Compare the results in a and b. Please explain the difference.