You are the manager of a monopolistically competitive firm, and your demand and cost functions are estimated as Q = 34 − 2P and C(Q) = 4 + 2Q + Q2.
a. Find the inverse demand function for your firm’s product.
P = − Q
b. Determine the profit-maximizing price and level of production.
Instructions: Round your response to the nearest penny (two decimal places).
Price: $
Instructions: Round your response to one decimal place.
Quantity:
c. Calculate your firm’s maximum profits.
Instructions: Round your response to the nearest penny (two decimal places).$
d. What long-run adjustments should you expect? Explain.
multiple choice
Entry will occur until profits are zero.
Exit will occur until profits rise sufficiently high.
Neither entry nor exit will occur.