Imagine you are a business consultant. 1. The situations below represent different firms in a perfectly competitive market. What advice would you give each firm? a. You're doing great. Keep your output where it is currently b. Increase your output to maximise your profits (minimise your loss). c. Decrease your output to maximise your profits (minimise your loss). d. Shutdown your business until market conditions (ie.price) improves. e. Go back and re-do your books. Your numbers make no sense. Price Output Revenue Total Total Total Fixed Cost Cost Total Variable Cost Average Cost Average Variable Cost Marginal Cost Answer A 4.00 2 000 2 000 2.00 4.00 B 16 000 4 000 8 800 2.20 4.40 15.00 3 000 3 000 9000 at minimum 1.00 1 500 D 1 500 a minimum level 2 000 1.00 0.75 1.50 2 000 E 800 2.00 1.50 10 WU I 9.00 atminimum 18 000 6 000 12 000 G 1.00 4 000 1 000 1.50 1.00 H 1 000 1 500 1 000 2.00 1.50