A firm with market power faces the following estimated demand , marginal cost ...
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A firm with market power faces the following estimated demand, marginal cost and total cost functions:
Qd = 86 000 – 200P + 0.6M – 2 000PR
MC = 40 + 0.09Q
TVC = 37Q
TFC = 850 000
where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good.
The firm expects income to be $110 000 and PR to be $8.
The Marginal Revenue Function is MR = – Q
The profit-maximizing choice of output is units.
The profit-maximizing price is $ .
The firm's profit is $ .
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