Assume that the short-run cost and demand data given in the table below confront a monopolistic competitor selling a given product and engaged in a given amount of product promotion.
Output TC (€) MC (€) QD Price (€) MR (€)
0 25 0 60
1 40 1 55
2 45 2 50
3 55 3 45
4 70 4 40
5 90 5 35
6 115 6 30
7 145 7 25
8 180 8 20
9 220 9 15
10 265 10 10
a. Calculate the marginal cost and marginal revenue of each unit of output in the above table.
b. At what output level and at what price will the firm produce in the short run? What will be the total profit?
c. What will happen to demand, price, and profit in the long run?