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Question :
(a) Suppose Firm A is a perfectly competitive firm producing good X and faces the following average revenue and average cost
Average Revenue: P = 10 Average Cost: AC = 4 + 0.6 Q
(i) Find the total cost and marginal cost function
(ii) Calculate the profit maximisation output level and the resulting profit/ loss.
(iii) Calculate market output and market price
(iv) If market demand shift to D = 420 - 2P and Firm A faces an average cost given by AC = 2 + 0.8Q what is the profit maximisation output level and resulting profit /loss for Firm A if AC is unchanged?
(v) What is the resulting output if we were in a LR situation?
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