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You are the manager of a monopolistically competitive firm, and your demand and cost            functions are given by Q = 36 – 4P and C(Q) = 124 – 16Q + Q2.               [NOTE: MC(Q) = -16+2Q]Calculate your firm’s profits level.


You are the manager of a monopolistically competitive firm, and your demand and cost            functions are given by Q = 36 – 4P and C(Q) = 124 – 16Q + Q2.

               [NOTE: MC(Q) = -16+2Q]

  1. Calculate your firm’s profits level.
Step 1

As a Manager of the Monopolistic competitive firm, the demand function is given as

Q = 36 – 4P

Cost function as

and C(Q) = 124 – 16Q + Q2

So if the P would be an inverse demand curve. Then, plugging values by calculating the demand curve in terms of P= 

Direct demand curve:


So in P, we would get the inverse demand curve.


Step 2

The  Monopolistic firms can maximize their profits at a point where marginal revenue is equivalent to their marginal cost. That is:



So the Total revenue would be



Now putting values in TR = P*Q





Therefore the marginal revenue is:





So the firm's total cost would be at-:



Now to calculate for the MC we get=




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