A competitive firm estimates its average
variable cost function to be
AVC = 125 - 0.21Q + 0.0007Q2 .
The firm's total fixed cost is $3,500.)
-At what level of output does the AVC reach its minimum? What is the AVC at
this output level?
-Suppose the price of the product is P = $125. Determine the profit maximizing
level of output? Compute the firm’s profit. If the firm is losing money, should
it produce? Explain.