The inverse demand for a product is given by P = 400 - 5Q, where Q measures the number of units and P is the price per unit. Suppose that total cost is TC = 100Q + 2.5Q² with marginal cost per unit of MC = $100 + 5Q. Technological innovation reduces total cost to TC = 25Q + 2.5Q² and marginal cost per unit to MC = $25 + 5Q. Identify equilibrium price and quantity before and after the cost reduction. How does profit change?

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The Answer of The inverse demand for a product is given by P = 400 - 5Q, where Q measures the number of units and P is the price per unit. Suppose that total cost is TC = 100Q + 2.5Q² with marginal cost per unit of MC = $100 + 5Q. Technological innovation reduces total cost to TC = 25Q + 2.5Q² and marginal cost per unit to MC = $25 + 5Q. Identify equilibrium price and quantity before and after the cost reduction. How does profit change?

The Inverse Demand for a Product Is Given by P