See figure below to answer remaining questions from j through n. Please circle y

Question

See figure below to answer remaining questions from j through n. Please circle your answer and write on the yellow cells wherever applicable. 13 12 10 MC ATC AVC 63 1234567891011 j(5 poinl) The firm's shont-nun supply curve is its marginal cost curve above S k. (½poin) The firma should shut down if the market price is above/belan s- 1 (½point) If the market pri falls below S4.50, the firm will earn positive/negatíveiem economic profits in the short run and remain in business / shut down. (%point) The firn will eam a negative economic profit but remain in business in the short run if the market price is between m. n.(2 points) The firm will cam a i. positive economic profit in the short run if the market price is i zero economic profit in the short run if the market price is ii. negative economic profit in the short run but remain in business if the market price iv. negative economic profit in the short run and shut down if the market price is above/below /equal to S

Explanation / Answer

Answer

j)

$4.5

The short-run supply curve is a marginal cost curve above minimum average variable cost.

k.

below, $4.5

the firm does not produce below price $4.5 to minimize losses.

l.

negative, shut down

the firm below price 4.5 shutdown and the loss is equal to fixed cost of the firm.

m.

4.5 and 6.3

the price below minimum ATC, the firm earns losses and it remains in the business price above minimum AVC which is $4.5

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