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Question 1 (20 points). We assume that a firm is in a perfectly competitive industry. Therelations between the firm’s total cost (TC), marginal cost (MC) and quantity produced(Q) are given by:TC=$1,000,000+$20Q+$0.0001Q2MC-8TC=$20+$0.0002QTotal cost includes a normal profit.(1). What are the levels of optimal output and profit if price is equal to $60 each? (5points)(2). If the total fixed cost is $1,000,000, check that the firm’s marginal cost is greater thanaverage variable cost at every point along the firm’s marginal cost curve. (5 points)(3). If the firm is typical in the industry, calculate the firm’s long-run equilibrium output,price, and economic profit levels. (10 points)

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