Question: 1.7. Suppose the same firms cost function is C(q) = 4q2 + 16. a. Find variable cost, fixed cost, average cost, average variable cost, and

1.7. Suppose the same firm’s cost function is C(q) = 4q2 + 16.

a. Find variable cost, fixed cost, average cost, average variable cost, and average fixed cost. (Hint: Marginal cost is given by MC = 8q.)

b. Show the average cost, marginal cost, and average variable cost curves on a graph.

c. Find the output that minimizes average cost.

d. At what range of prices will the firm produce a positive output?

e. At what range of prices will the firm earn a negative profit?

f. At what range of prices will the firm earn a positive profit?

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