Question

In: Economics

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.

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

Solutions

Expert Solution

Rahul Sunny answered 3 years ago
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