The market structure of home video gaming systems is best characterized by monopolistic competition. Quasar Entertainment is one of the producers in this market. The inverse demand for Quasar systems is:
P = 500 - 9.75Q^d
The resulting marginal revenue curve is
MR( ) = 500 - 19.5 .
Quasar's cost function is:
C(Q) = 0.25 + 6,250 ⇒ MC(Q) = 0.5Q.
Determine Quasar's profit maximizing level of output and the price charged to customers. Is this a long-run equilibrium?

Question

The market structure of home video gaming systems is best characterized by monopolistic competition. Quasar Entertainment is one of the producers in this market. The inverse demand for Quasar systems is:
P = 500 - 9.75Q^d
The resulting marginal revenue curve is
MR(

) = 500 - 19.5

.
Quasar's cost function is:
C(Q) = 0.25

+ 6,250 ⇒ MC(Q) = 0.5Q.
Determine Quasar's profit maximizing level of output and the price charged to customers. Is this a long-run equilibrium?

Quizplus · Accepted Answer

The Answer of The market structure of home video gaming systems is best characterized by monopolistic competition. Quasar Entertainment is one of the producers in this market. The inverse demand for Quasar systems is: P = 500 - 9.75Q^d The resulting marginal revenue curve is MR( ) = 500 - 19.5 . Quasar's cost function is: C(Q) = 0.25 + 6,250 ⇒ MC(Q) = 0.5Q. Determine Quasar's profit maximizing level of output and the price charged to customers. Is this a long-run equilibrium?

The Market Structure of Home Video Gaming Systems Is Best