1a. A small firm produces generic waterproof phone cases. It can sell all it is capable of producing at the market price of $15each. Its Monthly cost function is
TC=4500 + 0.2Q + 0.025Q²
i. Find the profit-maximizing monthly quantity
ii. Find the Monthly profit
iii. Should the firm continue to operate in the short run? Very briefly, why or why not?
1b. The firm now finds a way to distinguish their product. It now faces a demand of Q = 344 - 4P
If they charge one price to all customers,
i. Find the profit-maximizing monthly quantity
ii. Find the profit-maximizing price
iii. Find the level of profits.
1c. The same firm can now employ first degree price discrimination perfectly.
i. Find the profit-maximizing monthly quantity
ii. Find the level of profits