Suppose a firm has no fixed costs, so all its costs are variable, even in the short
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Suppose a firm has no fixed costs, so all its costs are variable, even in the short run.
a. If the firm’s marginal costs are continually increasing
(that is, marginal cost is increasing from the first unit of output produced), will the firm’s average total cost curve have a U shape?
b. If the firm’s marginal costs are $5 at every level of output, what shape will the firm’s average total cost have?
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