Assume that a firm acts as a price taker. Regardless of the demand,it sells each unit of its product for $5.
a) Assume that the firm's marginal cost is given by MC = 0.2q + 3. What is the level of output q that maximizes profit?
b) Assume the total cost is given by TC = 0.1q^2 + 3q + 10. Calculate the firm's profit.
c) Graph these results and label firm's supply curve.