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A perfectly competitive firm’s profit-maximizing price is $15. At MC = MR, the output is 100 units. At this level of production, average total costs are $12. The firm’s economic profits are
a. $500 in the short run.
b. $300 in the short run and long run.
c. $500 in the short run.
d. $300 in the short run.
The investors in exercise 2 are surprised by firm's performance in year 5. Instead of being $20 million, the firm's profits are $40 million. What happens to firm B's stock price in year 6 and 7?
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