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1. There are three firms in the package delivery business. Firm 1 has a total cost curve given by C (Q ) .1Q2 Q 40
1. There are three firms in the package delivery business. Firm 1 has a total cost curve given by C (Q ) .1Q2 Q 40 where Q is measured in packages delivered per day. Firms 2 and 3 have 1111 identical costs to each other but different than firm 1. In particular, the total cost curve is C (Q ) .25Q2 100 (j = 2 or 3). The daily demand is given by QD = 215 - P. jjj a) What are the marginal costs of firm 1? What are the average costs? What is the optimal scale of firm 1? What is the supply curve (use the long run shut down point)? Illustrate firm 1's marginal and average cost curves. b) What are the marginal and average costs of firms 2 and 3. What is the optimal scale of these firms? What are the supply curves (use the long run shut down point)? c) What is the market supply of the 3 firms? What is the market clearing price and quantity in the short run? d) Are firms earning positive profits in the short run
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