Question: Initially the market price was p 20 and the

Initially, the market price was p = 20 and the competitive firm’s minimum average variable cost was 18, while its minimum average cost was 21. Should it shut down? Why? Now this firm’s average variable cost increases by 3 at every quantity, while other firms in the market are unaffected. What happens to its average cost? Should this firm shut down? Why?

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  • CreatedNovember 13, 2014
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