Problem the production level if the producer operates in a monopolistic competitive market

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  A  software producer has fixed costs of $20,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below:

 

  Q                        TVC                           Price

  2,000                $5,000                          $20   

  4,000                  7,000                            15   

  6,000                18,000                            10   

  8,000                33,000                              5   

10,000                50,000                              1   

 

(a.) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? 

 

    • 8 years ago
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