(Scenario: Monopolistically Competitive Firm) Use Scenario: Monopolistically Competitive Firm.Given the information in the scenario,what is the profit-maximizing level of output for this firm in the short run? Scenario: Monopolistically Competitive Firm
For a monopolistically competitive firm,the demand curve is given by Q = 160 - P,and the firm's cost functions are: MC = 20 + 2Q and TC = 20Q + Q²+ 20.

A) 160 units
B) 20 units
C) 35 units
D) 180 units

Question

Maliyah Bartley · Accepted Answer

Final Answer : C, Explanation :  To find the profit-maximizing level of output, we need to set marginal cost (MC) equal to marginal revenue (MR) and solve for the corresponding quantity.First, we need to find the total revenue (TR) function:TR = P x Q = (160 - Q)Q = 160Q - Q^2Next, we find the marginal revenue (MR) function by taking the derivative of the total revenue function with respect to Q:MR = dTR/dQ = 160 - 2QSetting MR = MC, we get:160 - 2Q = 20 + 2QSolving for Q, we get Q = 35 units.Therefore, the profit-maximizing level of output for this firm in the short run is 35 units.

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