A monopolistically competitive firm faces demand given by this equation: P = 50 –Q. It has...

A monopolistically competitive firm faces demand given by this equation: P = 50 –Q. It has no fixed costs and its marginal cost is $20 per unit. 69. (Scenario: A Monopolist's Market ) What quantity will the firm produce when it is maximizing its profits?

Solutions

Expert Solution

In the short run, monopolistically competitive firm produces where MR=MC to maximise its profits

TR= 50Q-Q²

So, MR= dTR/dQ= 50- 2Q

In short run equilibrium, MR=MC

So, 50- 2Q= 20

solving we get, Q= 30/2= 15

Rahul Sunny answered 1 year ago

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