. In a market there is a single firm that produces a unique product and can manipulate the price P(Q) by changing its output Q to maximise its profit. Suppose the consumers have a linear aggregated inverse demand function: P subscript D left parenthesis Q right parenthesis equals a minus b Q, and the cost function of this single firm is C left parenthesis Q right parenthesis equals c Q. a) What are the market-clearing price and quantity in this market?
Answer: Market-Clearing Price and Quantity In a market with a single firm, the market-clearing price and quantity are determined by the relationship between the demand and the cost. The demand is described by a linear aggregated inverse demand function, PD(Q)