a. If the market price is $7

i. Should the firm produce? Why?

ii. How much should the firm produce? Why?

iii. Determine the firms profit.

b. If the market price is $3

i. Should the firm produce? Why?

ii. How much should the firm produce? Why?

iii. Determine the firms profit.

c. If the market price is $1

i. Should the firm produce? Why?

ii. How much should the firm produce? Why?

iii. Determine the firms profit.

d. In the short run, what is the minimum price the firm will accept for produce any output? What is the output associated with this price? Explain.

e. In the long run, how much output will the firm produce and what price will it receive for it? Explain.

2. Answer the questions below using the cost curves for the price-taking firm shown in the following graph: 2. Answer the questions below using the cost curves for the price-taking firm shown in the following graph