Suppose a firm's inverse demand curve is given by P 120 - 50 and its cost equation
Question:
Suppose a firm's inverse demand curve is given by P 120 - 50 and its cost equation is C 420 + 60Q + Q
a. Find the firm's optimal quantity, price, and profit (1) by using the profit and marginal profit equations and (2) by setting MR equal to MC. Also provide a graph of MR and MC.
b. Suppose instead that the firm can sell any and all of its output at the fixed market price P 120.
At any higher price, it will sell nothing. Find the firm's optimal output.
Step by Step Answer:
Related Book For
Managerial Economics
ISBN: 9781119554912
5th Edition
Authors: William F. Samuelson, Stephen G. Marks
Question Posted: