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The demand and cost function for a company are estimated as:
P=100-8Q
TC=50+80Q-10Q2+0.63Q3
a. What price should the company charge if it wants to maximise profit in the short run?
b. what price should it charge if it wants to maximise revenue in the short run?
c. Suppose the company lacks confidence in the accuracy of cost estimatesexpressed in a cubic equation and simply wants to use linear approximation. Suggest linear representation of this cubic equation. What difference would it make on the recommended profit-maximising and revenue-maximising price?
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