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Unformatted text preview: maximized b. Answer: i. Q = 7 or Q = 8 ii. Get Profits = 5 either way B. Use “rule”: set Q where MR = MC, or P = MC a. Q = 8, where MR = MC = $5 C. Why not pick MR = MC = $5 at Q =1? a. Moving to Q = 2 will raise profits b. Use upward-sloping part of MC curve D. Shut-down condition in short-run: a. If TR ≥ TVC, then set Q, where MR = MC b. If TR < TVC, then set Q = 0 i. Shut down if can’t cover TVC ii. Losses = fixed costs $ Q MC AC AVC 1 8 5 1...
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