Suppose you are a perfectly competitive firm producing computer memory chips. Your production capacity is 1000 units pe r year. Your marginal cost is P10 per chip up to capacity. You have a fixed cost of P10,000 if production is positive and P0 if you shut down. What are your profit-maximizing levels of production and profit if the market price is (A) P5 per chip, (B), P15 per chip, and (C) P25 per chip? For case (B), explain why production is positive even though profits are negative.

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