4) A firm operating in a monopolistically competitive market faces demand and marginal revenue

Question

4) A firm operating in a monopolistically competitive market faces demand and marginal revenue

curves as given below:

P = 14 – 0.1Q MR = 10 – 0.2Q

The firm’s marginal cost curves is:

MC=-10+.4Q

where P is in dollars per unit, output rate Q is in units per time period, and marginal cost MC is in dollars.

a. Determine the price and output rate that will allow the firm to maximize profit or minimize losses.

Microeconomics