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Question Description

1. 
Consider the following table when answer the
questions below.
Q
TC
AFC
AVC
ATC
MC
0
100




1
150
100.00
50.00
150.00
50
2
175
50.00
37.50
87.50
25
3
190
33.33
30.00
63.33
15
4
210
25.00
27.50
52.50
20
5
240
20.00
28.00
48.00
30
6
280
16.67
30.00
46.67
40
7
330
14.29
32.86
47.14
50
8
390
12.50
36.25
48.75
60
a. 
Suppose
the market price is equal to P=$40. How many units should the firm produce and
what will its profit be?
 
b. 
Suppose the market price drops to P=$20. Should
the firm shut down? Explain your answer by discussing the firm’s profits or
losses.

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