Essay
You are the manager of a monopolistically competitive firm. The inverse demand for your product is given by P = 200 - 10Q and your marginal cost is MC = 5 + Q.
a. What is the profit-maximizing level of output?
b. What is the profit-maximizing price?
c. What are the maximum profits?
d. What do you expect to happen to the demand for your product in the long run? Explain.
Correct Answer:
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a. Setting MR = MC yields 200 - 20Q = 5 ...View Answer
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