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3. Consider the following nn competing in a perfectly competitive market. The market: price is $9. This rm is currently producing l units. P MC / 59

Consider the following firm competing in a perfectly competitive market. The market price is $9. This firm is currently producing 1000 units.


  1. What is the marginal profit of the 1000th unit? (Show work)
  2. How much are total fixed costs? (Show work)
  3. What are profits when the firm produces 1000? (Show work)
  4. Is this firm profit maximizing? (If "yes" shade in the profit; If "no" label the profit maximizing output Q* and do not shade in profit)
  5. Is this industry in long-run equilibrium? If yes, explain how you know. If not, explain precisely how the industry would transition to LR equilibrium. Screen Shot 2018-08-03 at 10.45.07 AM.png
Screen Shot 2018-08-03 at 10.45.07 AM.png

3. Consider the following finn competing in a perfectly competitive market. The market: price is $9. This
firm is currently producing lflflfl units. P
MC /
59 ATE AVE 54 U
53 *— I000 '0 a. TWhat is the marginal profit ofthe lfl‘flflfil unit'iII {Show work} {lfl} h. How much are total fixed costs? {Show work}L {lfl} c. What are profits when the firm produces lflflfl? {Show work}{]fl} d. Is this firm profit maximizing? {If“yes" shade in the profit: If“no" label the profit maximizing
output Q" and do not shade in profit} {H1} e. Is this industry in long—run eouilihrium'iII Ifyes. explain how you know. If‘not1 explain precisely how
the industry would transition to LB. equilibrium. {lfl}

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