Problem: A competitive firm estimates its average variable cost function to be . AVC=125-.21Q+.0007Q^2(squared)
The firm's total fixed cost is $3,500.
1. The marginal cost function associated with this average variable cost function is
SMC =_____________.
2. AVC reaches its minimum at ______ units of output. Minimum AVC is _________.
3. Suppose the price of the product is P = $125. The firm should produce _________ units of output. The firm earns a profit (loss) of ____________.
4. Suppose the price of the product is P = $115. The firm should now produce _________ units of output.
Its profit (loss) will be _________.
e. Suppose the price of the product falls to P = $100. The firm should produce _________ units of output.
Its profit (loss) will be ____________.