A competitive firm has an AV C = y+3, and a fixed cost equal to 9.
a. Derive the firm’s cost function C(y), marginal cost function SMC(y) and average cost SAC(y). Show AV C,SMC and SAC on a graph.
b. Suppose the market price is 15. How many units would the firm produce? Determine the associated profit and producer surplus for the firm. Explain any difference.