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Question: you are the manager of a company that sells iphone...

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You are the manager of a company that sells iPhone cases. The costs of producing the cases are given by C = 200 + 20Q (or the fixed costs are $200 and the variable costs are $20 per case). The demand for the cases is given by QD = 180 – 5P.

a) What is the firm’s optimal quantity and price?

b) What is the firm’s profit at the optimal quantity and price?

c) If the fixed costs decrease from $200 to $100, what is the new optimal price and quantity? What is the firm’s new profit?

d) If the variable costs increase from $20/unit to $24/unit, what is the new optimal price and quantity? What is the firm’s new profit?

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