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Assume that the short-run cost and demand data given in the tables below confront a monopolistic competitor selling a given product and engaged in a
Assume that the short-run cost and demand data given in the tables below confront a monopolistic competitor selling a given product and engaged in a given amount of product promotion.
Cost Data | Demand Data | ||
Total Output | Total Cost | Quantity Demanded | Price |
0 | $25 | 0 | $60 |
1 | 40 | 1 | 55 |
2 | 45 | 2 | 50 |
3 | 55 | 3 | 45 |
4 | 70 | 4 | 40 |
5 | 90 | 5 | 35 |
6 | 115 | 6 | 30 |
What output and price levels will maximize the firm's profit in the short run?
Multiple Choice
- 3 units and $45
- 5 units and $35
- 4 units and $40
- 6 units and $30
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