Question
You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 36 - 4 P and
You are the manager of a monopolistically competitive firm, and your demand and cost functions are given byQ= 36 - 4PandC(Q) = 4+ 4Q+Q2.
a. Find the inverse demand function for your firm's product.
P=-Q
b. Determine the profit-maximizing price and level of production.
Instruction:Price should be rounded to the nearest penny (two decimal places).
Price: $
Quantity:
c. Calculate your firm's maximum profits.
Instruction:Your response should appear to the nearest penny (two decimal places).
$
d. What long-run adjustments should you expect? Explain.
multiple choice
- Exit will occur until profits rise sufficiently high.
- Neither entry nor exit will occur.
- Entry will occur until profits are zero.
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