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The graph shows demand and marginal cost for a perfectly competitive firm. If the firm is producing 100 units of output, increasing output by one unit would the firm’s profit by $ . If the firm is producing 300 units of output, increasing output by one unit would
Firm A and firm B both have total revenues of $240 000 and total costs of $280 000.
Firm A has total fixed costs of $30 000, while firm B has total fixed costs of $70 000.
Which of the following statements are true in the short run?
I. Firm A should operate. II. Firm B should operate. III. Firm A should shut down. IV. Firm B should shut down.
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