I'm having a hard time with these two question.

1. If market price is greater than or equal to the minimum of AVC but below the minimum of

AC, then

• the firm will shut down.

• the firm will operate because its loss is less than if it shut down.

• revenue is lower than variable costs.

• profit is positive and so the firm will operate.

1. In a perfectly competitive market

• buyers are price-takers.

• buyers view products from different firms as differentiated.

• individual buyers have horizontal demand curves.

• firms' demand curves are vertical.