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Refer to Figure 22.3 for a perfectly competitive firm. If the market price is $10,
Suppose that there are 1,000 firms in a perfectly competitive industry, each with a short-run total cost curve given by TC = 800 + 8Q + 0.1Q^2.
a. What is the profit-maximizing output for each firm at a market price of $20?
b. How much profit does each firm make at a market price of $20?
c. Explain whether the industry will expand or contract in the long run?
25) In a perfectly competitive market, the market price is $8. An individual firm is producing the output at which MC = $8.AVC at that output is $10. What should the firm do to maximize its economic profit in the short run? A) Expand output. B) Leave output unchanged. C) Shut down. D) Contract output. E) Raise the price.