Consider the cost function C(Q) = 400 + 0.5Q2 for RussCo to produce its new Phone....

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Question

Consider the cost function C(Q) = 400 + 0.5Q2 for RussCo to produce its new Phone....

Consider the cost function

C(Q) = 400 + 0.5Q2

for RussCo to produce its new Phone. Using that cost function for the Phone, determine the profit-maximizing output, price and profit (or loss) for the RussCo Phone, and discuss its long-run implications, under three alternative scenarios:

a. RussCo Phone is a perfect substitute with a similar product offered by Apple, Samsung and several other Phones that have similar cost functions and that currently sell for $400 each. 1.5 Points

b. RussCo Phone has no substitutes and so is a monopolist, and the demand for the RussCo Phone is expected to forever be Q = 34.66 – (1/6)P – note you use the earlier listed cost function. 1.5 Points

c. RussCo Phone currently has no substitutes, and currently the demand for the RussCo Phone is Q = 88 – (1/5)P, but RussCo anticipates other firms can develop close substitutes in the future. – note you use the earlier listed cost function. 1 Point

business economics

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