Explain what should be the production level if fixed costs

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Reference no: EM1347223

A software producer has fixed costs of $20,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below:

Q TVC Price
2,000 $5,000 $20
4,000 7,000 15
6,000 18,000 10
8,000 33,000 5
10,000 50,000 1

(a.) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work).

(b.) Explain what should be the production level if fixed costs rose to $70,000 per month?

Reference no: EM1347223

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