Scenario: Monopolistically Competitive Firm A monopolistically competitive firm's demand for its product is equal to Q = 160 - P, and its MC curve is equal to MC = 20 + 2Q.Its TC curve is as follows: TC = 20Q + Q₂ + 20.
(Scenario: Monopolistically Competitive Firm) Given the information in the scenario Monopolistically Competitive Firm, what is the profit-maximizing level of output for this firm in the short run?
A)160 units
B)20 units
C)35 units
D)180 units

Question

Quizplus · Accepted Answer

To find the profit-maximizing level of output for the firm, we need to set marginal revenue (MR) equal to marginal cost (MC) and solve for Q.

First, we can find the firm's marginal revenue by taking the derivative of the demand function:
MR = dTR/dQ = 160 - 2Q

Setting MR equal to MC:
160 - 2Q = 20 + 2Q
Solving for Q:
4Q = 140
Q = 35

Therefore, the profit-maximizing level of output for this firm in the short run is 35 units.

Scenario: Monopolistically Competitive Firm a Monopolistically Competitive Firm's Demand for Its