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Unformatted text preview: 2 q . At the minimum AVC , MC = AVC . So set these two equal to each other to get the shutdown quantity: 2 + q = 2 + 1 2 q , so which holds only for q = 0, i.e., the shutdown quantity is zero. Substitute this value into either the MC or the AVC to get the shutdown price of $2. (d) What is this firm's shortrun supply curve, q s ( P )? The firm decides how much to supply (i.e. produce) by setting price equal to MC : P = 2 + q . Solving for q , we get the firms supply curve: q s ( P ) = P 2 so long as P > $2, the shutdown price. For P equal or below $2, the firm supplies zero....
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This note was uploaded on 10/26/2010 for the course ECONOMICS ECON 201 taught by Professor Dr.shomubanerjee during the Summer '07 term at Emory.
 Summer '07
 Dr.ShomuBanerjee
 Microeconomics, Perfect Competition

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