Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 23

You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 36 - 4 P and C ( Q ) = 124 - 16 Q + Q 2.
a. Find the inverse demand function for your firm's product.
b. Determine the profit-maximizing price and level of production.
c. Calculate your firm's maximum profits.
d. What long-run adjustments should you expect? Explain.