Consider a world of 1000 firm competing among themselves to sell plain white t-shirt. In such a world, let us assume that the price of a t-shirt is $10, and that the marginal cost of producing each t-shirt is given as, MC = 2 + 0.02q. Assume further that each firm has a total cost function described as, TC = 100 + 2q + 0.01q².

a.Find the level of output (q*) at which the firm's profit would be maximized.

b.How much profit does the firm make at the output level q*

c.At that equilibrium level of output (q*), what is the firm's AVC?

d.If all firms are identical, what is the equilibrium price and output in the industry?