Let the total price of producing Tchotkes (T), be given by T2 TC(T) = 2, 000, 000 + 20T + 2 40, 000 1. Compute the average cost function for making Tchotchkes. 2. Compute the marginal cost function for making Tchotchkes. 3. Find the efficient scale production level. That is, find the amount of Tchotkes necessary to minimize average costs. 4. If the inverse demand function is given by T P(T) = 2000 500 what is the profit-maximizing production level? 5. How does the efficient scale production level compare to the profit-maximizing level? 6. How can you tell if producing more will lower or increase average costs if you are at the profit-maximizing level? [Hint: Consider the relation between the average and marginal cost curves