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Assignment2: Quantitative Exercises<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Your consulting firm was justgranted an exclusive contract for your state. You now must decide your pricingpolicy, given the following relationships:
P= $1400 - 0.0004Q
MR = $1400 - 0.0008Q
AVC = $1000
where P is the price, Qthe quantity, and AVC the average variable cost.
The firm will encounter no fixedcosts, and all revenue is after taxes. As your firm has been granted anexclusive contract, your pricing and output decisions will be those of amonopolist.
Tasks:
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