Assume the following inverted demand function of a firm in the short run: P = 200 – 5Q. Obtain the MR function from this inverted demand function.
Now assume the total cost function of this firm is : TC = 100 + 500Q – 20Q2. The MC function from this TC will be MC = 500 – 40Q
What are the profit-maximizing price and quantity of this firm?
What is the amount of short-run profit or loss? Explain fully.