The following table gives the short run average total and variable cost as well as the marginal cost for firm. OUTPUT 4 32 26 8 Average total cost Average variable cost Marginal cost 5 26 18 10 6 20 16 12 7 18 14 14 8 16 15 16 9 18 16 21 a. Suppose that the marginal revenue is given by MR = 24-2Q. Is the optimal output level Q=5, Q=6 or Q=7? b. The price at which it can sell Q units is given by p= 24 - Q. Will it produce the optimal output level? Does it make enough profits to cover its fixed and its variable cost? Exercise 2: Consider a perfectly competitive firm that has a total marginal cost of producing output given by: MC = 10 + 4Q. Assume that the market price is P = 54. Find the optimal quantity produced by the firm.