producing output but are cur- 8. The market for fertilizer is perfectly competitive. Firms in the market are rently incurring economic losses. a. How does the price of fertilizer compare to the av- b. Draw two graphs, side by side, illustrating the total cost, the average variable cost, and the marginal cost of producing fertilizer? erage market. present situation for the typical firm and for the c. Assuming there is no change in either demand or the firms' cost curves, explain what will happen in the long run to the price of fertilizer, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to the market. Yates Co. uses the allowance method to account for bad debts. At the end of the period. Yate's unadjusted trial balance shows an accounts receivable balance of $10,000; allowance for doubtful accounts balance of $400 (credit): and sales of $500,000. Based on history, Yates estimates that bad debts will be 1% of sales. The entry to record estimated bad debts will include a debit to bad debts expense in the amount of O $5,400 O $4,600 O $600 O $1,400 O $5,000