Suppose perfectly competitive firm produces

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Suppose a perfectly competitive firm produces 40 units of output per-period (e.g., daily) and sells all units for the market price of $6. If average fixed cost is $2, average variable cost is $1, and marginal cost is $6, then the firm:

i. is maximizing total profit by producing and selling 40 units of output

ii. earns a per-period total profit of $120

iii. earns a per-period total profit of $240

iv. should close down in the short run and suffer a loss equal to $80

Reference no: EM131101455

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