A Firm Is Considering Entering a Market Where Demand for Its

question 30

Essay

A firm is considering entering a market where demand for its product is Q = 100 - P.This demand function implies that the firm's marginal revenue function is MR = 100 - 2Q.The firm's total cost of producing the product for that market is TC = 500 + 10Q + Q² which indicates that its marginal cost function is MC = 10 + Q.Indicate whether or not the firm should enter the market by calculating the firm's profit (Hint: to find the price that the firm should charge,take the profit maximizing quantity and plug it into the demand equation).Describe how your previous answer would change if the firm's total cost function became TC = 1000 + 10Q + Q².

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Definitions:

Reliable

A term indicating the consistency or repeatability of a measure or test over time.

Test Outcome

The result or conclusion derived from conducting a test, which could be quantitative or qualitative, based on the objectives and methodology of the test.

Hypothesis

An educated guess formed on the grounds of restricted data, designed to facilitate more in-depth inquiry.

Dependent Variable

The variable in an experiment that is expected to change as a result of manipulations of the independent variable.