3.2 Suppose that your marketing research department has found that the consumer (retail)

demand for your product is Q = 150 - P where Q is the quantity demanded and P is the price. This demand function can be solved for the inverse demand—that is, the price as a function of the quantity demanded:

P = 150 - Q Your marginal cost of production and average total cost of production are constant and equal to $75 per unit. The marginal cost of distribution and average total cost of distribution are also constant and equal to

$15 per unit.

a. If you produce and distribute the product, what is your profit-maximizing price and output?

b. How much economic profit do you make?

c. If the distributors of your product are perfectly competitive, what are your profitmaximizing wholesale price and output and what will be your economic profit?

What is the retail price?