Homework Answers
Answer
Option 1
the firm produces at MR=MC where
Q=400 units
P=$9
ATC=$
Economic profit =(P-ATC)*Q
=(9-6)*400=$1200
the firm in the market is earning an economic profit so new firms
will enter the market up to the firm makes zero economic profit as
the demand of the firm decreases and shifts to the left in the long
run.
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