Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 2

Candak Corporation produces professional quality digital cameras. The market for professional digital cameras is monopolistically competitive. Assume that the inverse demand curve faced by Candak (given its competitors' prices) can be expressed as P = 5,000 + 0.2 Q and Candak's total costs can be expressed as TC = 20,000,000 + 0.05 Q 2. Answer the following questions.
a. What price and quantity will Candak choose
b. Is this likely to be a long-run equilibrium for Candak Corporation Why or why not If not, what is likely to happen in the market for professional digital cameras, and how will it affect Candak