From the scenario, assuming Katrina’s Candies is operating in
the monopolistically competitive market structure and faces the
following weekly demand and short-run cost functions:
VC = 20Q+0.006665 Q2 with MC=20 + 0.01333Q and FC = $5,000
P = 50-0.01Q and MR = 50-0.02Q
*Where price is in $ and Q is in kilograms. All answers
should be rounded to the nearest whole number.
Algebraically, determine what price Katrina’s Candies should
charge in order for the company to maximize profit in the short
run. Determine the quantity that would be produced at this price
and the maximum profit possible.
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