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A competitive firm has an average variable cost function given by AVC [ y ] = 1 0 + 4 y . Moreover, when the
A competitive firm has an average variable cost function given by AVC y
Moreover, when the market price is $ the firm's maximum profit is $
Given this information:
a Derive the firm's cost function cy marginal cost, MCy and average total
cost ATCy Show MCy AV Cy and ATC y on a graph.
b Let the market price be $ How much will the firm produce? Determine the
associated profit and producer surplus. Show your results in the graph you
constructed for part a
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