Assume that a firm faces a downward-sloping demand curve. Draw a diagram showing the firms AR, MR,
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Assume that a firm faces a downward-sloping demand curve. Draw a diagram showing the firm’s AR, MR, AC and MC curves. (Draw them in such a way that the firm can make supernormal profits.) Mark the following on the diagram:
(a) The firm’s profit-maximising output and price.
(b) Its sales-revenue-maximising output and price.
(c) Its sales-maximising output and price (subject to earning at least normal profit).
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