Question 1 Please show all calculations to get credit 10 poi

Question 1 Please show all calculations to get credit (10 points) a. Suppose you are the manager of a watchmaking firm operating in competitive market. The price of the watches from the competitive market is p. The firm\'s cost function is given by TC 450 +15Q+2Q2.Find equations for the marginal cost curve, average cost curve, average variable cost curve and the supply function of this firm (all the fixed costs are sunk); draw the supply function clearly showing the coordinates of the shut-down point (call it Graph 1a) MC-acAC--. AVCz-; TC the mathematical calculations)+ 1 points (for graph)-5 points) ??? TFC + TVC (4 points (all b. Suppose a bolt producer is in a competitive market and its cost function is given by C 450+15q+24 The market price is P 115 per unit. Suppose the industry demand function is given by Q nxq- D(P) 5023-P;compute the equilibrium production of the firm, the equilibrium profit of the firm (r - TR- TC:TR px q), and the number of firms in the market (n). Please draw the graph for the industry in this perfectly competitive market, clearly showing the industry demand, industry supply, equilibrium price, uantity and shade the area of the consumer surplus-no need to numerically compute consumer surplus (call this Graph 1.b) ) (4 points (all the mathematical calculations)+1 points (for graph) 5 points)

Solution

Ans 1

TC=450+15Q+2Q^2

Marginal Cost Curve when we differentiate TC with respect to Q

MC=15+4Q

Average Cost Curve=TC/Q=450/Q+15+2Q

Average Variable Cost=Variable Cost/Q

Variable Cost is the function of Q

AVC=(15Q+2Q^2)/Q=15+2Q

AC=450/Q+15+2Q for Price >AC we have Supply Function curve is P=MC

P=15+4Q otherwise Q=0 becuase to produce anything when P<AC isnt profitable and feasible