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1. Suppose, a perfectly competitive firm is trying to determine its profit-maximizing level of output. The product sells for $260 per unit. The total cost function is given by C = 1000 + 80Q - 6Q2 + .2Q3. Find the equilibrium price and maximum profits. Also, find the shutdown point for this firm.
2. You are the manager of a monopolistically competitive firm, and your demand and Cost functions are given by Q = 20 - 2P and C = 104 - 14Q + Q2.
a) Find the inverse demand function for your firm's product.
b) Determine the profit-maximizing level of output and price.
c) Calculate the firm's maximum profits.
d) What long-run adjustments should you expect?
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