Michelle's Monopoly Mutant Turtles (MMMT) has the exclusive right to sell Mutant Turtle t-shirts in the United States. The demand for these t-shirts is Q = 10,000/P2. The firm's short-run cost is SRTC = 2000 + 5Q, and its long-run cost is LRTC = 6Q.
a. What price should MMMT charge to maximize profit in the short run? What quantity does it sell, and how much profit does it make? Would it be bet- ter off shutting down in the short run?
b. What price should MMMT charge in the long run? What quantity does it sell and how much profitdoes it make? Would it be better off shutting down in the long run?
c. Can we expect MMMT to have lower marginal cost in the short run than in the long run? Explain why.