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The research department of Cardinal Novelties has estimated the demand function facing the firm for price...

  1. The research department of Cardinal Novelties has estimated the demand function facing the firm for price increases and price declines from the prevailing price are, respectively:

Q = 390 -20P    and      Q’ = 150-5P

The marginal and average total cost functions of the firm were also estimated to be, respectively:

MC =2.5 + .05Q     and            ATC = 2.5 + .025Q

Determine the best level of output of the firm, the price at which the firm sells its output, as well as the total profit.

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