Firm A produces widgets at a constant unit cost of 2 and a fixed cost of...
Firm A produces widgets at a constant unit cost of 2 and a fixed cost of 15.
It faces market demand P =22 − 2Q.
a) If A is profit-maximizing, what price will it set? What will be
the quantity sold and profit?
b) Calculate the elasticity of demand at this point. What is its relationship to marginal revenue (MR)?
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Firm A produces widgets at a constant unit cost of 2 and a fixed
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