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Scenario: Monopolistically Competitive Firm
For a monopolistically competitive firm,the demand curve is given by Q = 160 - P,and the firm's cost functions are MC = 20 + 2Q and TC = 20Q + Q 2 + 20.
-(Scenario: Monopolistically Competitive Firm)Use Scenario: Monopolistically Competitive Firm.Given the information in the scenario,what is the profit-maximizing level of output for this firm in the short run?

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To find the profit-maximizing level of output, we need to set MR = MC. Since the demand function is Q = 160 - P, we can rewrite it as P = 160 - Q. Thus, we can rewrite the revenue function as R = P*Q = (160-Q)*Q = 160Q - Q^2. The marginal revenue function is MR = 160 - 2Q. Equating MR and MC, we have 160 - 2Q = 20 + 2Q. Solving for Q, we get Q = 35. Therefore, the profit-maximizing level of output is 35 units.

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