Suppose a firm’s inverse demand curve is given by P = 120 - .5Q and its cost equation is C = 420 + 60Q + Q2. a. Find the firm’s optimal quantity, price, and profit (1) by using the profit and marginal profit equations and (2) by setting MR equal to MC. Also provide a graph of MR and MC. b. Suppose instead that the firm can sell any and all of its output at the fixed market price P 120. Find the firm’s optimal output.

Suppose a firm’s inverse demand curve is given by P = 120 - .5Q and its cost equation is C = 420 + 60Q + Q2. a. Find the firm’s optimal quantity, price, and profit (1) by using the profit and marginal profit equations and (2) by setting MR equal to MC. Also provide a graph of MR and MC. b. Suppose instead that the firm can sell any and all of its output at the fixed market price P 120. Find the firm’s optimal output.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter18: Asymmetric Information

Section: Chapter Questions

Problem 18.3P

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