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Suppose a price-taking firm faces a market price of P = $70 and has a total cost function given by:
TC = 269 + 2Q + Q2.
a. Algebraically derive the firm’s fixed cost, average cost and marginal cost functions.
b. What quantity will the firm produce?
c. Compute the revenues, costs, and profits associated with the profit-maximizing quantity.
d. Repeat (3) and (4) when the market price is P = $22
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