A firm has the following short run demand and cost schedule for a product.
Q = 200 – 5P
TC = 400 + 4Q
a. What are price, quantity and profit for this company?
b. Suppose the above demand shifted to Q = 100 – 5P. If this is a firm under monopolistic competition, what a plausible reason is there for such a shift in view of your answer in (a),
c. What should the firm do in the face of a new demand schedule shown in (b) in the short run? Explain why.
d. In your answer in (c), what kind of strategies you need to consider for the long run decision?
e. It is sometimes said that a firm has to be either “good or lucky” in this kind of situation. Explain what is meant by this statement.

  • CreatedAugust 05, 2013
  • Files Included
Post your question