Assume there is one cost function which is: C = 3 + 5q − 4q2 +...

Assume there is one cost function which is:
C = 3 + 5q − 4q2 + q3 (1)

(a) Calculate the Marginal cost MC.
(b) Calculate the Average fixed cost AFC.
(c) Calculate the Average variable cost AVC.
(d) Calculate the Average cost AC.
(e) Find the point where MC and AVC intercept and the corresponding cost C.
(f) Assume you notice the market price is $5, aiming at maximizing the profit, what is the optimal number to produce?
(g) Find the maximum profit based on the price you find from question (f).
(h) Provide a market price at which there is a competitive equilibrium market.

Expert Solution

Rahul Sunny answered 8 months ago

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