Assume a monopoly firm is considering the production of two brands, 1 and 2. Marginal cost is constant at 20 for both products -- assume no fixed costs. The inverse demand for brand i is Pi = 140 - qidq;, where i ‡ j and d is a constant. Part a) Find the firm's quantities Part b) Find the firm's prices Part c) Find the firm's profit

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Assume a monopoly firm is considering the
production of two brands, 1 and 2. Marginal cost
is constant at 20 for both products -- assume no
fixed costs. The inverse demand for brand i is
Pi = 140 - qidq;, where i
j and d is a
constant.
Part a) Find the firm's quantities
Part b) Find the firm's prices
Part c) Find the firm's profit
Part d) Using a comparative static, how does firm
profit change with d? Economically interpret the
result.
Transcribed Image Text:Assume a monopoly firm is considering the production of two brands, 1 and 2. Marginal cost is constant at 20 for both products -- assume no fixed costs. The inverse demand for brand i is Pi = 140 - qidq;, where i j and d is a constant. Part a) Find the firm's quantities Part b) Find the firm's prices Part c) Find the firm's profit Part d) Using a comparative static, how does firm profit change with d? Economically interpret the result.
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