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Suppose that the economist of Corporation XYZ estimates the following long run cost function for a product M that the company produces and sells.
TC = 5Q2 + 10Q +180
The market price for product M is fixed at P = $70
a. What is the total fixed cost?
b. What is the total variable cost function?
c. Suppose that Company XYZ would like to minimize average total cost. What volume of output of product M should be produced?
d. At P = $70, calculate whether the firm has economic profits, economic loss or normal profits. Explain why.
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