Should the firm continue to operate in the short run

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A monopolist operates with the following data on cost and demand. It has a total fixed cost of $1,400 and a total variable cost of Q2 , where Q is the number of units of output it produces. The firm's demand curve is c1P $120 - 2Q. The size of its sunk cost is $600. The firm expects the conditions of demand and cost to continue in the foreseeable future.

a) What is the firm's profit if it operates and it maximizes profit?

b) Should the firm continue to operate in the short run, or should it shut down? Explain.

Reference no: EM131248392

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