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What price and quality will xyz corporation choose

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Reference no: EM131698620

THE COURSE IS MICROBUSINESS DECISION

XYZ Corporation produces professional quality digital cameras. The market for professional digital cameras is monopolistically competitive.Assume that the inverse demand curve faced by XYZ Corporation (given its competitors' prices) can be expressed as P = 500 - 0.2Q and its total costs can be expressed as TC = 20,000,000 + .05Q^2.

a) What price and quality will XYZ Corporation choose?

b) Is this likely to be a long-run equilibrium for XYZ Corporation? Why or why not? If not what is likely to happen in the market for professional digital cameras, and how will it affect XYZ Corporation?

Reference no: EM131698620

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