The graph shows demand and marginal cost for a perfectly competitive firm.

If the firm is producing 100 units of output, decreasing output by one unit would the firm’s profit by $ .

Firm A and firm B both have total revenues of $200,000 and total costs of $260,000.

Firm A has total fixed costs of $90,000, while firm B has total fixed costs of $20,000.

Which of the following statements are true in the short run?

I. Firm A should operate.