Q18 solution neededQuestion 18If the firm is in the situation described in Q. 17 (i.e., continuing to operate in the short-run, but earning negative profits), what will the firm do in the long-run ?Group of answer choicesRaise it's pricesExit the marketLower it's quantity producedLower it's prices to try to sell more Question 17Refer to Figure 5-1.At which price range will the firm continue to operate in the short run but earn negative profits?any price higher than P4any price higher than P3 but less than P4anyprice higher than P2 but less than P3any price lower than P1 Suppose a firm operating in a perfectly competitive market has the following cost curves:Figure 5-1MCATCP4P3P2PlPriceQ1Q2 03 04Q52AVCQuantity

18. Here, it is given that a perfectly competitive firm is operating at a level where it incurs…

Answered: If the firm is in the situation…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Q18 solution needed

Question 18

If the firm is in the situation described in Q. 17 (i.e., continuing to operate in the short-run, but earning negative profits), what will the firm do in the long-run ?

Group of answer choices

Raise it's prices

Exit the market

Lower it's quantity produced

Lower it's prices to try to sell more

Question 17
Refer to Figure 5-1.
At which price range will the firm continue to operate in the short run but earn negative profits?
any price higher than P4
any price higher than P3 but less than P4
any
price higher than P2 but less than P3
any price lower than P1

Suppose a firm operating in a perfectly competitive market has the following cost curves:
Figure 5-1
MC
ATC
P4
P3
P2
Pl
Price
Q1Q2 03 04
Q5
2
AVC
Quantity

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