1. 1. Suppose the short-run cost function can be written as TC = 250 + 100. Average fixed cost equals F 250 F 10 r 250K) + 10 r 250iQ . Tommy rents office space for $12,000 per year. He uses the office to fill out tax return forms for his clients. He fills out 1,000 tax returns per year. If the owner of the building raises Tommy's rent to $13,000 per year, the marginal cost of filling out tax returns will 1\" increase by $1 1\" increase by $1000 r increase by some amount that cannot be computed without more information r not change . If a perfectly competitive firm realizes that ATC> P>AVC, the firm will r shut down in the short run. r earn zero economic profit. 1\" operate at a loss in the short run. 1\" select a level of output where P 1" MC. Assuming a stable demand curve, if a profit maximizing monopolist suddenly discovers that MR > MC, it will respond by r increasing output and lowering price r decreasing output and lowering price r increasing both output and price 1\" decreasing both output and price 1 points QUESTION 2 1. The supply curve for a monopolist r is its marginal cost curve above average variable cost r is its marginal revenue curve C is the same as the demand curve r does not exist