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Calculation of optimal output.

Two monopolistically competitive company face the same demand and total revenue functions but face different total cost functions. These demand, total revenue, and cost functions are given below.

P = 25 - 0.25Q

TR = 25Q - 0.25Q2

Total cost function of firm 1: TC1 = 4,000 + 5Q

Total cost function of firm 2: TC2 = 3,000 + 7Q

Find the optimal (profit maximizing or cost minimizing) output of each firm,.
Find the price that each firm charges at the when producing the optimal output.
Find the total profit or loss of each firm at the optimal output.

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M916133

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