2. Answer the following questions. a. b. Suppose that a firm is producing where 0 MC. What would happen to total revenue, total cost, and profit if the firm produced one more unit of output? If a firm produces the next unit of output, total revenue rises from $12,000 to $13,500 and the marginal cost of the next unit is $1,700. Should the firm produce the next unit of output? 3. Suppose that there are 1,000 firms in a perfectly competitive industry, each with a short-run total cost curve given by TC = 800 + 8Q + 0.1Q2 and marginal cost curve given by MC = 8 + 0.2Q. a. b. c. What is the profit-maximizing output level for each rm at a market price of $20? How much prot does each rm make at a market price of $20? Explain whether the industry will expand or contract in the long run. 4. Answer the following questions. a. In a perfectly competitive industry, the industry demand and supply curves are given by Q0 = 2,500 50F and Q5 = 20P 300. Given the market conditions, graph the competitive firm's demand and marginal revenue curves. Graph a competitive firm that is earning economic prot. In your graph, indicate the level of prot by shading in the appropriate area. A perfectly competitive rm is selling 2,000 units at a price of $3, with average total cost equal to $1.85. Calculate the firm's profit