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10. You are hired as a consultant by a struggling tirm. 'i'nis tirm currently produces 1UU units per day and sells them in a perfectly
10. You are hired as a consultant by a struggling tirm. 'i'nis tirm currently produces 1UU units per day and sells them in a perfectly competitive market at $22 each. At the current output level, total cost is $3000 per day, variable cost is $2,500 per day, and marginal cost is $45. The marginal cost curve intersects AVC at $20 and ATC at $23. a) Depict this firm's production and cost situation using a diagram. Include the market price, average total cost (ATC), average variable cost (AVG), and marginal cost (MC) curves. You may assume ATC and AVG are U-shaped, and that MC is upward sloping. b) What is your recommendation to this firm: should they shutdown, produce at increased output, produce at decreased output, or continue with 100 units per day? Briey explain your reasoning. Is the firm profitable
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