Determine the profit-maximizing price and quantity

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Reference no: EM131602719

You are given the following data for your firm, which sells high-capacity video MP3 players.

Q P TC

0 $440 $100

2 $420 $468

4 $400 $788

6 $380 $1084

8 $360 $1380

10 $340 $1700

12 $320 $2068

14 $300 $2508

16 $280 $3044

18 $260 $3700

20 $240 $4500

a. Determine equations for P=f(Q), MR=f(Q), ATC=f(Q, Q2), AVC=f(Q, Q2), MC=f(Q, Q2). Recall that your marginal equations should be derivatives of your totals!

b. Determine the profit-maximizing price and quantity. (Since MC is in terms of Q2, solving with calculus and algebra can be messy. Your table should give an exact answer.)

c. How much total profit would your firm earn if you set P and Q according to part b?

d. Describe the competitiveness of the market by calculating the Lerner index.

Reference no: EM131602719

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