If market inverse demand is pQ a bQ and the firm produces

If market inverse demand is p(Q) = a - bQ and the firm produces according to C(Q) = cQ + dQ^2, determine the firm\'s optimal quantity, price and profit level. (Assume that a, b, c, d > 0.) What conditions on b and d must hold in equilibrium?

For equilibrium, MR = MC

Price = a-bQ

MR = a-2b

MC = c+2d

a-2b = c+2d

a-c = 2b+2d

a-c = 2(b+d)

$If market inverse demand is p(Q) = a - bQ and the firm produces according to C(Q) = cQ + dQ^2, determine the firm\'s optimal quantity, price and profit level.$

If market inverse demand is pQ a bQ and the firm produces

Solution

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