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The inverse demand for a product is given by P = 400 - 5Q, where Q measures the number of units and P is the price per unit. Suppose that total cost is TC = 100Q + 2.5Q2 with marginal cost per unit of MC = $100 + 5Q. Technological innovation reduces total cost to TC = 25Q + 2.5Q2 and marginal cost per unit to MC = $25 + 5Q. Identify equilibrium price and quantity before and after the cost reduction. How does profit change?
Club Meeting
A scheduled gathering of members of a particular group or organization to discuss issues, plans, or activities related to the group's interests.
Attendance
The act of being present at a particular place or event.
Persons
Refers to individuals or entities that are capable of possessing rights and duties.
Long-Run Equilibrium
A market condition where supply equals demand, all firms are maximizing profit, and no firm has an incentive to change its output.
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