Simple profit-maximization problem

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A competitive firm has the following cost function:

TC = 0.6Q2 + 2Q + 16

The firm believes the market price for their product will be $11 with probability 0.49. Otherwise, they believe the market price for their product will be $15. Find the firm's expected profit.

Correct Answer: 94.5 ± 15%

Response Feedback: Here, the market price is uncertain/unknown. Find the expected price. After that, this is a simple profit-maximization problem.

Please provide workout steps.

Reference no: EM131557969

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