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Suppose that the average variable cost of the firm is given

Suppose that a competitive firm"s marginal cost of producing output q is given by MC(q) = 3 + 2q. Assume that the market price of the firm"s product is $9.

a. What level of output will the firm produce?

b. What is the firm"s producer surplus?

c. Suppose that the average variable cost of the firm is given by AVC(q) = 3 + q. Suppose that the firm"s fixed costs are known to be $3. Will the firm be earning a positive, negative, or zero profit in the short run?

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Solution Preview :

Prepared by a verified Expert

Microeconomics: Suppose that the average variable cost of the firm is given

Reference No:- TGS0660325

Have a Question? (oR Write a Review)

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Solution Preview :

Prepared by a verified Expert

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Reference No:- TGS0660325

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