give me an economics expert If it does not shut down, a perfectly competitive firm produces where marginal cost is equal to the marginal revenue Question content area bottom Part 1 A. always to maximize its profit. B. only in the long run. C. only in the short run. D. only if it is not possible to produce where price equals average variable cost. E. only if it is not possible to produce where price is greater than average total cost.
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A monopolistically competitive firm will a. maximize profits by producing where $M R=M C$ b. not earn an economic profit in the long run. c. shut down if price is less than average variable $\operatorname{cost}$ d. do all of the above.
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In a perfectly competitive industry, price equals marginal cost. Which of the following is NOT an implication of this? A) The product will be produced at the minimum average total cost in the long run. B) A competitive firm sells its product at the opportunity cost of the product. C) The price of the product accurately reflects its cost to society. D) Competitive firms maximize profits.
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The following two questions refer to the cost and revenue conditions of a monopolistically competitive firm shown in the graph below. MC = marginal cost, ATC = average total cost, AVC = average variable cost, and MR = marginal revenue. 32. The firm's profit-maximizing output in the short run is (A) zero, because P < AVC (B) Q1, because MR = MC (C) Q2, because P = MC (D) Q3, because MC = ATC (E) impossible to determine. 33. Which of the following will the firm do in the long run if market conditions do not change? (A) It will increase output to Q2 and lower price to P2 to minimize losses. (B) It will increase output to Q3 and raise price to P4 to earn zero economic profit. (C) It will produce Q1 and set price equal to marginal revenue. (D) It will exit the industry. (E) It will build a larger plant to achieve decreasing returns to scale. 34. Assume a perfectly competitive firm is currently producing 100 units of output. Its marginal cost is $6 and rising at that output quantity. Its average variable cost is $7 and its average fixed cost is $3. If the product's price is $6, which of the following will the firm do in the short run to maximize its profit? (A) Shut down (B) Produce, but less than 100 units of output (C) Produce more than 100 units of output (D) Continue to produce at exactly 100 units of output (E) Increase its price above $6
Andrew D.
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