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Consider the average variable cost (AVC) function of a company as AVC = 5q 2 . It is known that the market is competitive and
Consider the average variable cost (AVC) function of a company as AVC = 5q2. It is known that the market is competitive and there're 10 firms identical in costs. The fixed cost (FC) is 150. If the market demand is P = 100 - Q.
a) Find the supply function of a firm and that of the market.
b) Find the level of production that maximizes the profit of each firm.}
c) Find the equilibrium price and quantity
d) Estimate the profit of each firm
e) Given the profit achieved by each firm, should it continue to produce, and why?
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