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?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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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?
Transcribed Image Text: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?
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