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Part III. Graphing the perfectly competitive model (20 points). Use one graphing paper only for the graph. Attach the graphin

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Answer #1

Ans 1.)

Average cost = Total Cost ÷ Q

= (128 + 69Q - 14Q2 + Q3) ÷ Q

  

Average cost = (128/Q) + 69 - 14Q + Q2

Ans.2)

Marginal Cost = d(TC)/d(Q)

= 69 - 28Q + 3Q2

Ans 3.)

Output Price Total revenue Marginal revenue Marginal Cost Average revenue Average cost Average variable cost 0 Profit -128 -1In the above image, we can see that the profit is maxmized at output leve = 9th unit.Also , at this level, profit is maximum = $196.

So, the optimum level of output = 9 units

Ans 4.)

0 1 2 3 4 5 6 7 8 9 10 11 12 Total revenue Total cost

In the above image, we can see that the profit is maximized at a point where the gap between the total cost and total revenue curve is highest , as indicated by red colored line.

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