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| Suppose short-run inverse demand in a monopolistically competitive market is represented by: p(x) = 18 – 0.2x. Cost is given by: TC(x) = 320 + 2x + 0.05×2. a. (liven these demand and cost conditions, what price, output, and profits result in the short run? b. What will happen as the firm moves from the short to the long run? Suppose entry or exit causes the demand curve to rotate on its p axis. In particular, assume that inverse demand can be described by: p(x) = 18 – n ? x. c. What output and price result in LRMCE? |
