Consider the following total cost function for an individual firm: C(q) = 10 + q +÷q?. a- At what level of output is average cost at its lowest? b- Draw a graph showing firm average cost against quantity. c- Suppose that there is an industry with two identical firms, with this cost function. What is the industry total cost curve? What is the industry marginal cost curve? d- Suppose these two firms together act in a perfectly competitive manner. What is the price level in the case where these firms act perfectly competitively? What are the profits of the firms given perfectly competitive pricing?

Consider the following total cost function for an individual firm: C(q) = 10 + q +÷q?. a- At what level of output is average cost at its lowest? b- Draw a graph showing firm average cost against quantity. c- Suppose that there is an industry with two identical firms, with this cost function. What is the industry total cost curve? What is the industry marginal cost curve? d- Suppose these two firms together act in a perfectly competitive manner. What is the price level in the case where these firms act perfectly competitively? What are the profits of the firms given perfectly competitive pricing?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter11: Price And Output Determination: Monopoly And Dominant Firms

Section: Chapter Questions

Problem 3E

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