1. A firm has a fixed production cost of $5000 and a constant marginal cost of production of $500 per unit produced.

(a) What is the firm's total cost function? Average cost function? These functions, C(q) and AC(q) (or T C(q) and AT C(q)) describe total cost and average cost for any value of q.

(b) If this firm wanted to minimize the average total cost, would it choose to be very large or very small? Explain.