Question: (a) (b) (C) (d) The supply function is the inverse of the marginal cost function. If the supply function is g = 43;), then we

 (a) (b) (C) (d) The supply function is the inverse of

(a) (b) (C) (d) The supply function is the inverse of the marginal cost function. If the supply function is g = 43;), then we can invert the equation to get 33 = go, so we have M0 = 3:}. If total cost TC = ng + F C, then the derivative with respect to quantity is % = 2 - g + 0 = go = MC. This is consistent with the marginal cost we just found. Optional explanation: marginal cost is the derivative of total cost with respect to quantity, so total cost is the antiderivative (or integral) of marginal cost with respect to quantity: TC = fMqu = f quq = g - 2192 + c = ng + c. In a general case, the constant of integration 0 can take on any arbitrary value, but in this application it has a very specic value that it represents: xed cost F0. This constant \"disappears\" when we take the derivative of total cost, and it \"reappears\" when we take the antiderivative of marginal cost. Total revenue TR = pq: the rm sells 9 units of output at a price of p each. If the rm obeys its supply function, g = 3(1)) = 3p, so that TR = pip = 3,112. Total cost T0 = ng + F0, which becomes T0 = Egg)2 + F0 when the supply function is substituted in for q. Distributing the exponent, this is T0 = - 1361.512 + PC = pz + F0 = 3102 + F0, what we wanted to show. Prot is total revenue less total cost: a = TR TC = E gap(3132 +FC'). Combining terms, this is 1r =31)? FC

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