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You are the manager of a monopolistically competitive firm. The present demand curve you face is P=100-4Q. Your cost function is C(Q) = 50+8.

You are the manager of a monopolistically competitive firm. The present demand curve you face is P=100-4Q. Your cost function is C(Q) = 50+8.5Q^2.

What level of output should you choose to maximize profits?

MR= MC Q=?
How do you solve this problem? If you can solve it, can you show the calculations?
Thank you.

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Top Answer

Dear student Please accept the solution attached. If you... View the full answer

8547687.docx

Inverse demand function s given as:
P = 100 – 4Q
TR = P×Q = 100Q – 4Q2
C(Q) = 50+8.5Q2
A monopolistically competitive firm will maximize its profits.
Profit (π) = TR – TC
= 100Q – 4Q2 –...

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