A firm is producing 200 units of its product. At this level of output the AVC=$20, and the ATC=$70. The firm is a price taker and the price for its product is $100. Assuming that the firm is maximizing profits and that labor is the only variable input. From this information:
a. What are the fixed costs of the firm?
b. What are the profits or losses?
c. What are the rents, if any?
d. Show your results in (b) and (c) in a graph on the graph paper provided.
e. What will happen in this industry in the long-run? Explain.