Explain why each of the following statements about profit-maximizing competitive firms is incorrect.
Restate each one correctly.
a. A competitive firm will produce output up to the point where price equals average variable cost.
b. A firm's shutdown point comes where price is less than minimum average cost.
c. A firm's supply curve depends only on its marginal cost. Any other cost concept is irrelevant for supply decisions.
d. The P = MC rule for competitive industries holds for upward-sloping, horizontal, and down wards loping
MC curves.
e. The competitive firm sets price equal to marginal cost.