Assume that the short run cost and demand data given in the table below confront a monopolistic competitor selling a given product and engaged in a given amount of product promotion. Compute the marginal cost and marginal revenue of each unit of output and enter these figures in the table.
|
Output
|
Total
|
Marginal
|
Quantity Demanded
|
Price
|
Marginal
|
Total
|
|
|
cost
|
cost
|
|
Revenue
|
Revenue
|
|
|
0
|
$25
|
0
|
$60
|
|
|
|
|
1
|
40
|
1
|
55
|
|
|
|
|
2
|
45
|
2
|
50
|
|
|
|
|
3
|
55
|
3
|
45
|
|
|
|
|
4
|
70
|
4
|
40
|
|
|
|
|
5
|
90
|
5
|
35
|
|
|
|
|
6
|
115
|
6
|
30
|
|
|
|
|
7
|
145
|
7
|
25
|
|
|
|
|
8
|
180
|
8
|
20
|
|
|
|
|
9
|
220
|
9
|
15
|
|
|
|
|
10
|
265
|
10
|
10
|
|
|
|
a) At what output level and at what price will the firm produce in the short run? What will be the total profit?
b) What will happen to demand, price, and profit in the long run?