1 A single rm, exogenous price This problem covers a single rm facing a given price. Maybe the price is regulated by the government for some other reasons unexplained here. Alternatively, maybe this is a constant international price that cannot be affected by anything that happens to the rm. 1.1 No tax 1. What are AC 0;) and AVG (:1)? What is the marginal cost (remembering that it is just the derivative of the total cost function, M C (q) = C' ((1))? Illustrate these cost curves on a graph. 2. Does AC (q) have a U-shape? For what production level does AC (q) equal MC (q)? What is the break-even price, that is, the price at which the rm will earn zero prot? 3. Suppose that the price of the output is 50. What is the production decision? What is the level of prot? Use your graph to shade the area that represents prot. 4. What is the supply curve of an individual rm, q (p)? 1