Problem: Tyvex LLC produces professional quality color laser printers. The market for professional color laser printers is monopolistically competitive. Assume that the inverse demand curve faced by Tyvex (given its competitors' prices) can be expressed as
P = 5,000 - .2Q and Tyvex's total costs can be expressed as
TC = 20,000,000 + .05Q2.
Q1. What price and quantity will Tyvex choose?
Q2. Is this likely to be a long-run equilibrium for Tyvex LLC? Why or why not?
Q3. If not, what is likely to happen in the market for professional color laser printers, and how will it affect Tyvex?