00:01
So here the image is actually a little bit cut off, but i'm quite sure that i can recover it with no problem.
00:06
So we have quantity, we have price, and we know that the market price is equal to 4.
00:12
We are told that this is the price, and the individual firm does not have any control over the price.
00:16
We see that the firm's marginal cost looks like this.
00:20
That's the red line.
00:22
And the marginal cost intersects 4 at a quantity of 11.
00:26
This is what we're given.
00:27
We also have this green line which just touches 11, something like this.
00:33
And this would be the average variable cost.
00:36
And up here we have the average total cost.
00:40
This is what the diagram we've presented.
00:42
So the key is, here the firm is just covering its variable costs, and therefore is just able to avoid shutdown...