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A monopolistically competitive company assembles and installs solar panels it imports at $10 per unit. All remaining costs of the company, denoted RC, is given by the following (where Q is a unit of solar panel): RC(Q) = 1,000+5Q2. The demand faced by this company is given by P=500-30Q.

a) What is the optimal production level, Q*, and what is the profit at Q*?

b) A 30% tariff is imposed on imported solar panels. Assuming demand stays the same, what would be the new Q* and P(Q*)? 

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