ch8_p1 - c. Suppose that the average variable cost of the...

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8_1. Suppose that a competitive firm’s marginal cost of producing output q is given  by MC(q) = 3 + 2q.  Assume that  the market price of the firm’s product is $9. a. What level of output will the firm produce? b. What is the firm’s producer surplus?
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Unformatted text preview: c. Suppose that the average variable cost of the firm is given by AVC(q) = 3 + q. Suppose that the firm’s fixed costs are known to be $3. Will the firm be earning a positive, negative, or zero profit in the short run?...
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This note was uploaded on 12/28/2009 for the course ECON 120 taught by Professor Walsh during the Fall '09 term at University of Illinois, Urbana Champaign.

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