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Question 6. Consider the Sunshine Company, a perfectly competitive firm with the following cost function: TC=1200 + 6 + 2=2 where Q is the firm's
Question 6. Consider the Sunshine Company, a perfectly competitive firm with the following cost function: TC=1200 + 6 + 2=2 where Q is the firm's output per day.
a) Find the firm's marginal cost function. [2 marks]
b) If the price of Sunshine's product equals $66, how many units per day should the firm produce? [4 marks]
c) Find the firm's average variable cost function. [3 marks]
d) Is average variable cost at the quantity you calculated in part b) is less than the price of $66? What does it mean? [4 marks]
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