Production of a certain good is discrete and has a cost structure characterized as follows:
|
q
|
100
|
150
|
200
|
300
|
400
|
500
|
|
C(q)/q
|
300
|
250
|
220
|
200
|
190
|
188
|
Assume inverse demand is p(Q) = 300 - 0.2Q
a. Find the optimal monopoly output
b. Assume an incumbent monopoly operates according to (a). Is it profitable for a second firm to enter?