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A firm in a perfectly competitive market currently has ATC minimum of $20, AVC minimum of $15 and MC minimum of $10. Market Price =
A firm in a perfectly competitive market currently has ATC minimum of $20, AVC minimum of $15 and MC minimum of $10. Market Price = $17 A) Is this firm making profit, loss or breaking even? Explain. (you do not need to solve for a specific number) B) Draw two graphs depicting this situation, one for the market and one for the firm. On your graph identify Q* and the profit/loss (if there is any) C) Given the current situation, explain what will happen in the long run. D) Repeat the graphs from part B but now illustrating the long run changes/outcome that you explained in part C. (Please draw a second set of graphs for part D so that I can clearly see your answers for B and D separately)
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