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term2_Exam.pdl 5. (20 points)The market for candy is perfectly competitive, and the current market price of a candy is $16. S
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Answer #1

A- P = MC

16 = 4q

q = 4

B - AVC =VC/q = 15

Since , P>AVC ,so firm will not shut down in the short run

C- P = MC

16 = 2q

8 = q

D- AC = TC/q = 15

So, P= 16>AC

SO, Firm will not exit the market in the long run.

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