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4.Illustrate the SRATC, AVC, MC, and MR curves for a perfectly competitive firm that is operating at a loss. What is the output level that minimizes losses? Why is it more profitable to continue producing in the short run rather than shut down?
5. Industry councils promote the consumption of particular types of farm products. These groups urge us to “Drink Milk” or “Eat Apples.” Very little advertising is done by individual farmers. Using your understanding of the perfectly competitive market, explain this advertising strategy.6. Complete the following table and identify the profit-maximizing output.a.TotalMarginalMarginalTotalQuantityPriceRevenueRevenueCostProfit10$12$120$12$ 8$251112____________9______1212____________ 11______1312____________12______1412____________14______b.What is true about marginal revenue and marginal costs when profit is maximized?c. What would be the profit-maximizing level of output if price fell to $9?Answers: