You are the manager of a monopolistically competitive firm. The present inverse demand curve you face is P = 100 – 4Q (MR = 100 – 8R). Your cost function is C(Q) = 50 + 8.5Q2 and MC(Q) = 17Q.
What level of output should you choose to maximize profits?
What price should you charge?
What will happen in your market in the long run? Explain?