Refer to the diagram to the right. In the long run, why will the firm produce Q, units and not Qg units, which has a lower its average cost of production? OA. Although its average cost of production is lower when the firm produces Qunits, to be able to sell its output the firm will have to charge a price below average cost, resulting in a loss. B. The firm's goal is to charge a high price and make a small profit rather than a low price and no profit. OC. At Qg, average cost exceeds marginal cost so the firm will actually make a loss. Op. At Qg, marginal revenue t is less than average revenue cost which will result in a loss for the firm. Price and cost per unit ($) MR Q₁ QgQhQj Quantity MC ATC D

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Does a compentve firms price equal its marginal cost in a short run, on the long run or both? Explain, Does a competitive firms price equal the minimum of its average total cost in the short run, in the long run, or both ? Explain

Brody's firm produces trumpets in a perfectly competitive market. The table below shows Brody's total variable cost. He has a fixed cost of $240, and the price per trumpet is $60.-Calculate the average total cost of producing 6 trumpets. Show your work. -Calculate the marginal cost of producing the 11th trumpet. -What is Brody's profit-maximizing quantity? Use marginal analysis to explain your answer. -At the profit-maximizing quantity you determined in part (c), calculate Brody's profit or loss. Show your work. -Brody also produces saxophones at a loss in a perfectly competitive market. Draw a correctly labeled graph for Brody's firm showing the following at a market price of $200. -Brody's profit-maximizing quantity of saxophones -Brody's loss, completely shaded   Quantity Total Variable cost 6 $120 7 $145 8 $165 9 $220 10 $290 11 $390