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125% + T A View Zoom Add Page Insert Table Chart Text Shape Media Comment Collaborate Format Document 12 QUESTION 4: You own three firms
125% + T A View Zoom Add Page Insert Table Chart Text Shape Media Comment Collaborate Format Document 12 QUESTION 4: You own three firms that produce different products. The following table summarizes the conditions in each firm. Each firm is currently producing the level of output Q where MR=MC Price Quantity AFC AVC ATC TC TR Firm Q A 5 70 2 7 B 10 100 w 4 C 7 150 5 6 A) Fill-in the missing values in the table. B) "Firm A: Is firm A profitable or is it losing money? Why? . Find (calculate) the amount of a profit or a loss. . What the firm should do in the short run? Stay in business or shut down? Why? If the firm shuts down, what would be its total loss? Calculate the loss. C) Firm B: Is firm B profitable or is it losing money? Why? Find (calculate) the amount of a profit or a loss! What the firm should do in the short-run? Stay in business or shut down? Why? D) Firm C: Is firm C profitable or is it losing money? Why? Find (calculate) the amount of a profit or a loss. . What the firm should do in the short run and why? Stay in the business or shut down . If Firm B shuts down in the short run, what would be its total loss? E) "Even if a firm is losing money, it may be better to stay in business in the short-run". Is the statement ever true? If so, under what condition? TRUE ( FALSE (
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