Problem
1. Use the data in the preceding question to establish the LMC for each of these two firms.
(a) Check that these LMC curves intersect with the LAC curves appropriately.
2. Consider a firm whose ATC (in the short run) is given by: ATC = 2/Q+1+Q/8.
(a) Using a spreadsheet plot this curve for values of output in the range 1. . . 20. You should first compute the cost values in a table.
(b) Next tabulate the total cost for each level of output, using the fact that total cost is the product of quantity times ATC.
(c) Now compute the marginal cost in the fourth column of your table by observing how total cost changes at each level of output.
(d) Plot the MC curve on the same graph as the ATC curve, and verify that it cuts the ATC at its minimum point.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.