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Question: Consider the following short-term cost function C = 10 + y^2.  a. Obtain and plot and interpret t...

Show transcribed image text Consider the following short-term cost function C = 10 + y^2. a. Obtain and plot and interpret the average cost curve. b. Define marginal costs. Suppose that the marginal cost is given by MC = 2y. How does the graph of the marginal cost curve relate to the graph of the average cost curve? c. What is the optimality condition that has to be satisfied by a firm to determine the output level that maximizes profits? Interpret. d. Are the optimality conditions in c. sufficient for profit maximization? Why or why not.

Consider the following short-term cost function C = 10 + y^2. a. Obtain and plot and interpret the average cost curve. b. Define marginal costs. Suppose that the marginal cost is given by MC = 2y. How does the graph of the marginal cost curve relate to the graph of the average cost curve? c. What is the optimality condition that has to be satisfied by a firm to determine the output level that maximizes profits? Interpret. d. Are the optimality conditions in c. sufficient for profit maximization? Why or why not.