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A competitive firm’s cost of production is C(Q) = 16Q - Q2 + 4Q3 . Assume that the market price is P=26.
(a) Draw the firm’s supply curve. What is the lowest price at which the firm is willing to produce? You should show the exact coordinates of the supply curve at that price and the exact coordinates of the supply curve at the points where P=10 and P=26.
(b) In what circumstances should the firm choose Q=1/10?
(c) Calculate the firm’s inverse supply function, for the range of quantities where the firm has diseconomies of scale
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