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Unformatted text preview: higher 8 workers and produce up to the point where MC and price are equal, since at that point profit of the firm is maximized. f) If MC < AC then AC If MC = AC then AC min If MC > AC then AC This is because if MC of producing one more unit is < (>) than AC by producing one more unit AC will decrease (increase). 2. a) Break even b) Perfect competition is considered perfect in the sense that price reflects only and accurately the costs of producing and delivering that good or service, e.g. information in price only reflects the scarcity and difficulty of producing that good or service....
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This note was uploaded on 05/22/2010 for the course ECON 51 taught by Professor Leachman during the Fall '08 term at Duke.
- Fall '08