18IV1614II12AP1=MR1108.BPo=MRo0 24 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34QuantityUtilize the graph above, which illustrates average fixed costs, average variable costs,average total costs, and marginal costs of production for a firm in a perfectly competitivemarket, to answer the following question.If the price is P1 what should the firm do?O The firm should shut down in the short-run because price is below AVC. In the long-run, they will assess themarket conditions to see whether they should reopen for business or exit the market.The firm should decrease production because marginal revenue is greater than marginal cost. Therefore, thefirm has not maximized operating profits.O The firm should exit the market because firms will soon enter. This will drive the price below ATC, which willCost41

The given graph below highlights the perfectly competitive market Therefore I represents Average…

Utilize the graph above, which illustrates average fixed costs, average variable costs, average total costs, and marginal costs of production for a firm in a perfectly competitive market, to answer the following question. If the price is P1 what should the firm do?

Utilize the graph above, which illustrates average fixed costs, average variable costs, average total costs, and marginal costs of production for a firm in a perfectly competitive market, to answer the following question. If the price is P1 what should the firm do?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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