Consider three firms out of a competitive industry. They have the following technologies: C1 = y2+9; C2 = y2+y+9; C3 = y2+2y+9.
a. For each firm derive the SAC,SMC and AV C. Show these curves on three graphs, one for each firm.
b. Suppose that in the short run the market price is 7. Show each firm’s
profit on your graphs. Should all of these firms produce? Explain.