Question

56,57

Exhibit 89 Marginal cost Average total cost Dollars per unit Average variable cost 92999 Quantity per period 56. Refer to Exhibit 8.9, which shows a perfectly competitive firm's short-run output decisions. At price Pa, the form a. produces nothing. b. produces at a specific output to minimize its short-run loss. c. earns short-run economic profit by producing at a specific output. d. is indifferent between producing and shutting down. e, produces at a specific output to earn a normal profit. 57. The chances of successful collusion are greatest when a. firms are producing differentiated products. b. there are many firms in the industry. c. there are both small firms and large firms in the same industry. d. demand curves and cost curves are similar across firms in an industry. e demand is falling

Answer 1

Ans56) the correct option is e) produces at a specific output to earn a normal profit.

At Profit maximization, price = marginal cost. When price is P4, Marginal cost is equal to average total cost meaning the Profits are zero

Ans57) the correct option is d. demand curves and cost curves are similar across firms in an industry.​