99?? Question 1 Assume that in a perfectly competitive market, a firm's costs and revenues are marginal cost = average variable cost at $20 marginal cost = average total cost at $30 marginal cost = average revenue at $25 How will this firm determine the profit maximizing level of output? What price will this firm charge? Explain how the firm determined this price. Should this firm produce in the short run? Why or why not? Will this firm earn a profit or incur a loss? Why? Question 2 Assume that pencils are manufactured in a perfectly competitive market that is in long-run equilibrium. b. What is the relationship between market price and quantity and profit maximizing price and quantity? Explain. c. Rent on the factory building is an important fixed cost in the production of pencils, and the industry experiences significant increases in rent. What will happen to the firm's profit-maximizing quantity in the short run? Explain. Explain the impact of the rent increase on the firm's profit or loss in the short run. As a result of the rent increase, what will happen to each of the following in the long ru n? i. The number of firms in the market. Explain. Question 3