Suppose that a firm in a monopolistically competitive market has a cost function of TC= 100,000...

Suppose that a firm in a monopolistically competitive market has a cost function of TC= 100,000 + 20Q.

What is the marginal cost function?
If the price elasticity of demand is currently -1.5, what price should the firm charge?
What is the marginal revenue at the price computed in part b)?
If a competitor develops a substitute product and the price elasticity of demand increases to -3.0, what price should the firm now charge?

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Expert Solution

Rahul Sunny answered 1 year ago

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