Posted by **hiten** on Monday, November 29, 2010 at 1:26pm.

Suppose a monopolistically competitive firm’s demand is given by

P = 100 – 2Q

And its cost function is given by

TC = 5 + 2Q

a. Find the profit maximizing quantity, price, and total profit level.

b. Is this a long-run or a short-run outcome? How do you know?

c. Assuming that the slope of the demand curve remains constant, what will be the long-run equilibrium price and quantity for the firm?

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