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Suppose that you estimate the following cost function for your company, which is a firm operating in a monopolistically competitive market: TC= 180Q-8Q^2+0.5Q^3 You also
- Suppose that you estimate the following cost function for your company, which is a firm operating in a monopolistically competitive market:
TC= 180Q-8Q^2+0.5Q^3
You also estimate the following demand curve for the output you are producing.
P=360-8Q
- Derive the equations for average cost and marginal cost curves.
- Over what range of output do economies of scale exist? Diseconomies of scale?
- How many units of output will you produce and what price will you charge for each unit?
- Is the company making a profit or loss at the suggested output level? How much?
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