Illustrate the sratc avc mc and mr curves for a

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Chapter 12 / Exercise 3
Exploring Microeconomics
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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?
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Exploring Microeconomics
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Chapter 12 / Exercise 3
Exploring Microeconomics
Sexton
Expert Verified
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. Total Marginal Marginal Total Quantity Price Revenue Revenue Cost Profit 10 $12 $120 $12 $ 8 $25 11 12 ______ ______ 9 ______ 12 12 ______ ______ 11 ______ 13 12 ______ ______ 12 ______ 14 12 ______ ______ 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?

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