A firm has the following short-run demand and cost schedules for a particular product:

P= 45 - 0.4Q

TC = 400 + 5Q

a)At what level of output (quantity) is total profit maximized? At the level of output,what price will be charged?

(4 marks)

b)Compute the total cost, total revenue, and total profit at the profit-maximizing level of output for the firm.

(6 marks)

c)If this is a monopolistically competitive firm, what do you think would happen as the firm moves toward the long run? Explain using a graph.

(9 marks)