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HW_7SOLNS - b Here = MC 180 26Q Q2 To maximize profits set...

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SOLUTIONS TO HW#7 Chapter 8, Problem C2. a. = = - + MC ∆TC∆Q 90 9Q Q2 Setting P=MC, then solve for Q*. Verify that Q*=15 b. = - π R C where R=pQ. Verify that profits will be earned. c. d. Chapter 8, Problem C6 e. First, note that = - p 100 Q , then it follows that = - MR 100 2Q a. To maximize R, set MR=0, which yields Q1*=50; hence p1*=50
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Unformatted text preview: b. Here =-+ MC 180 26Q Q2 . To maximize profits, set MC=MR to find Q2*; verify that Q2*=20 and p2*=80. f. Verify that positive profits will be earned. c. Verify that by choosing Q1* and p1*, economic loss will follow. g. h....
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