A firm's marginal cost function is given by: 2 MC(q) = -9 If the future price of the firm's output is uncertain, and the firm expects that the price equals $35 or $45 each with a probability of 1/4, and $60 with probability 1/2, what is the optimal level of production for this firm in the presence of the uncertainty? q*=90 Oq*=100/3 q=75 q*=70

A firm's marginal cost function is given by: 2 MC(q) = -9 If the future price of the firm's output is uncertain, and the firm expects that the price equals $35 or $45 each with a probability of 1/4, and $60 with probability 1/2, what is the optimal level of production for this firm in the presence of the uncertainty? q=90 Oq=100/3 q=75 q*=70

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 4E

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