You are considering setting up a business manufacturing and selling giant foam hands
(with fingers making the #1 gesture). The market for giant foam fingers is very
competitive and the cost of one f... irm is given by C(q) = q
2 − 10q + 64. All firms are
identical and firms are free to enter or to exit the industry. Assume that the price for
foam fingers is $10.
(a) What are the average total cost, average variable cost, and marginal cost functions
for a single firm?
(b) Suppose you are already operating. If the market price for foam fingers were $10,
how many would you produce to maximize your profit?[Show More]