Question: A firm serving a market operates with total variable cost TVC = Q2. The corresponding marginal cost is MC = 2Q. The firm faces a

A firm serving a market operates with total variable cost TVC = Q2. The corresponding marginal cost is MC = 2Q. The firm faces a market demand represented by P = 40 - 3Q.
a) Suppose the firm sets the uniform price that maximizes profit. What would that price be?
b) Suppose the firm were able to act as a perfect first degree price-discriminating monopolist. How much would the firm's profit increase compared with the uniform profit-maximizing price you found in (a)?

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a The firm would maximize profit by producing until MR MC or 40 6 Q 2 Q Thus Q 5 ... View full answer

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