A firm's research department has estimated that if other firms in the industry are indifferent to changes in the price of its product, its demand curve will be
P₁ = 60 - Q
However, if other firms always charge the same price it does, the firm's demand curve will be
P₂ = 80 - 3Q
a. If the firm's marginal cost equals $30,00, what output and price will maximize profit? Assume that the other firms will not follow a price rise above $50.00 but they will follow a price decrease below $50.00)
b. If the firm's marginal cost equals $8.00, what output and price will maximize profit?

Question

Quizplus · Accepted Answer

The Answer of A firm's research department has estimated that if other firms in the industry are indifferent to changes in the price of its product, its demand curve will be P₁ = 60 - Q However, if other firms always charge the same price it does, the firm's demand curve will be P₂ = 80 - 3Q a. If the firm's marginal cost equals $30,00, what output and price will maximize profit? Assume that the other firms will not follow a price rise above $50.00 but they will follow a price decrease below $50.00) b. If the firm's marginal cost equals $8.00, what output and price will maximize profit?

A Firm's Research Department Has Estimated That If Other Firms