You are the manager of a firm that sells a “commodity” in a market that resembles perfect competition, and your cost function is C(Q) = 2Q + 3Q2. Unfortunately, due to production lags, you must make your output decision prior to knowing for certain the price that will prevail in the market. You believe that there is a 70 percent chance the market price will be $200 and a 30 percent chance it will be $600.
a. Calculate the expected market price.
b. What output should you produce in order to maximize expected profits?
c. What are your expected profits?
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https://termpapertutors.com/wp-content/uploads/2019/12/logo1-300x75.png00adminhttps://termpapertutors.com/wp-content/uploads/2019/12/logo1-300x75.pngadmin2018-01-04 07:12:222019-02-15 12:07:04What output should you produce in order to maximize expected profits?
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