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The Faculty of Economics and Administrative Sciences is considering to throw a party to its students. The marginal benefits to the students are given by MB=1200-Q2. ( Q is in a way the "party size" representing the intensity of the party, reflecting both the duration of the party and the amount of drinks consumed) marginal private costs are MPC=300. The problem is that the professors also want to attend the party and enjoy the music with the students but they can only attend if they agree to serve beer to the students. Normally, professors do not like this. The marginal cost to them is 200.
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Assumes the perfectly competitive firm is in long-run equilibrium also there is an rise in Demand
After that illustrate what is that firm as marginal revenue as it increases output from 1700 units to 2300 units
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