Question: 2 . A firm has a cost function that satisfies the following: ( i ) PS ( y ) Pi ( y ) =

2. A firm has a cost function that satisfies the following: (i) PS(y)\Pi (y)=2 for all y,(ii) SMC(0)=AVC(0)=1 and (iii)
y
AVC(y)
=
2
1
(20pts) a) Derive the firm's cost function C(y), marginal cost function SMC(y), average cost SAC(y), and average variable cost function AVC(y). Show AVC,SMC and SAC on a graph. b) Suppose the market price is 11. How many units would the firm produce? Determine the associated profit and producer surplus for the firm.

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