3. Suppose that a firm faces a demand curve that has a constant elasticity of 2. This demand curve is given by q = 256=P2. Suppose also that the Örm has a marginal cost curve of the form MC = 0:001q. a) Graph these demand and marginal cost curves. b) Calculate the marginal revenue curve associated with the demand curve; graph the curve. c) At what output level does marginal revenue equal marginal cost?

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