Explain why a firm should continue to operate in the short run so long as market price is greater the firm's average variable cost at the profit-maximizing level of outpu

10. Figure 5 shows the graph of the short-run cost curves for Tim-T-Shirts, a firm operating in a perfectly competitive market. P* denotes the current price for Tim T-Shirts. Based on the information in the graph, which of the following should we expect in the long run? a) New firms will enter the market. b) The number of firms in the market will remain unchanged. c) Gray Sweaters will increase the current price of sweaters. d) There is not enough information to answer the question. Figure 5 Price and Costs P* MC ATC AVC Quantity

a.Suppose a perfectly competitive firm can produce10000 bushels of corn a year at an output at which marginal revenue is equal to marginal cost. The market price of corn per bushel is $2. The firm's total costs per year are $30000 and fixed costs per year are $15000. Show and explain which of the following is true: In the short run, this firm should a) Produce 20000 bushels to try to increase economic profit. b) Produce 10000 bushels of corn because, although they are losing money, they are losing less than if they shut down. c)Shut down. d) Continue producing until the price of corn increases.       b.A perfectly competitive firm, with MC=q operates in a market character,zed by the following market demand and supply conditions: Demand: Q=20000-100P Supply: Q=100P   How much output does this competitive firm produce to maximize profit? Show your work graphically and algebraically.

1. Suppose a perfectly competitive firm has a cost function described by TC = 200Q+Q² +225 Each firm's marginal revenue is $240. a. Find the profit maximizing level of output. b. Is this a short-run or long-run situation? How do you know? c. Assuming that this firm's total cost curve is the same as all other producers, find the long-run price for this good.