Question 1. The cost curves below are for a firm operating in a competitive industry. The short run total cost for the firm is given by the equation: .

1. Label the curves on the graph.

1. What level of output should this firm produce in the short run? Explain.

The firm should produce at the level of output where marginal cost (MC) equals marginal revenue (MR), as this is the profit-maximizing condition for a firm in a competitive market. In the short run, the profit-maximizing level of output occurs where MC intersects the firm's marginal revenue (which is equal to the market price under perfect competition).

1. What price should this firm charge in the short run? Explain.

1. What is the firm's total cost at this level of output?

1. What is the firm's profit if it produces this level of output?

1. What is the lowest price at which the firm would be willing to produce in the short run? Explain.