|Question||Small Menu Costs Can Lead to Large Social Costs
(a) What is the equation of the firmâ??s marginal revenue curve (MR0)? (Recall that for a linear demand curve, MR is twice as steep as demand.)
(b) What quantity will the firm produce to maximize profits? What price will it set to ensure that it sells all that it produces?
(c) At the profit-maximizing price, what is the firmâ??s total revenue? Total cost? Profit?
(d) What is the value of consumer surplus?