You are currently employed by a firm that sells a differentiated product. While there are no...

You are currently employed by a firm that sells a differentiated product. While there are no perfect substitutes for your product, you note that there are a significant number of other firms that sell similar products as your own. While you enjoyed patent protection on your product in the past, the patent has expired, and firms can produce similar products without fear of legal action. An analyst has determined that the demand function for your firm is Q = 400 – 5P and you know that your cost function is C(Q) = 100 + 2Q + 2Q2. What is your firm’s profit-maximizing output, price, and profits? What long-run adjustments should you expect?

Expert Solution

Rahul Sunny answered 2 years ago

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