Question: A competitive firm estimates its average variable cost function to be AVC= 125-0.21Q+0.0007Q 2 . The firm's total fixed cost is $3,500. 1) What is

A competitive firm estimates its average variable cost function to be AVC= 125-0.21Q+0.0007Q².

The firm's total fixed cost is $3,500.

1) What is the marginal cost function associated with this average variable cost function

SMC =__________________________ ?

2) AVC reaches its minimum at ______units of output. Minimum AVC is $_________.

3) Suppose the price of the product is P = $125. The firm should produce _________ units of output. The firm earns a profit (loss) of $__________________.

4) Suppose the price of the product is P = $115. The firm should now produce _________ units of output. Its profit (loss) will be $_________.

5) Suppose the price of the product falls to P = $100.The firm should produce _________ units of output. Its profit (loss) will be $____________.

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