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The Bell Automotive is one of several makers of electric motors. Accordingly, it is believed that the firm operates in a monopolistically competitive market. The demand function for its product is estimated as:
Q = 8,300 - 2.1P
and its total cost function is
C(Q) = 2,200 + 480Q + 20Q2
a. What price and quantity will the company choose to maximize profit? What is the company's total profit?
b. Is this likely to be a long run equilibrium for the firm? Why? Why not? If not, what kind of adjustment will occur in the market and how will it affect the company?
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