1. A competitive firm sells its product at a price of $0.10 per unit. Its total cost function is:
TC = 5 – 0.5Q + 0.001Q2
(a) Determine the output rate that maximizes profit or minimizes losses in the short run.
(b) If input prices increase and cause the cost function to become:
TC = 5 – 0.10Q + 0.002Q2
What will the new equilibrium output rate be? Explain what happened to the profit maximizing output rate when input prices were increased
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