A competitive firm has a cost function

C(q) = q2 +16 Assume the inverse demand function is

P(q) = 12?q

1. (a)Set up the firm's profit maximization problem. (Points: 4)
2. (b)What are the optimal quantity supplied, the market price, and the firm's profit? (Points: 8)

Suppose that a market regulation is imposed such that the output price is fixed at p = $10. (c) Solve again the problem of a firm acting competitively in this market and provide the

equilibrium quantity and price. (Points: 6)

(d) In the following graph draw the firm's marginal cost curve and mark the optimal pair (q?,mgC(q?), given the price of $10. Given this point, draw the region that represents the firm's profit/loss. (Points: 12)

Hint: The average total cost curve is already drawn. What represents the difference p-ATC(q)?

A competitive rm has a cost function C(q)=q2+16 Assume the inverse demand function is P(q)=12q (a) Set up the rm's profit maximization problem. (Points: 4) (b) What are the optimal quantity supplied, the market price. and the firm's prot? (Points: 8) Suppose that a market regulation is imposed such that the output price is xed at p = $10. (c) Solve again the problem of a rm acting competitively in this market and provide the equilibrium quantity and price. (Points: 6) (d) In the following graph draw the rm's marginal cost curve and mark the optimal pair (q',mgC(q*). given the price of $10. Given this point, draw the region that represents the rm's prot/loss. (Points: 12) Hint: The average total cost curve is already drawn. What represents the difference mm)