Question: Suppose that for a positive quantity, Marginal Cost is $75 and Average Total Cost is $85. At this quantity, the firm is experiencing economies of

Suppose that for a positive quantity, Marginal Cost is $75 and Average Total Cost is $85. At this quantity, the firm is experiencing economies of scale. If producing more output decreases average total cost then the firm is experiencing economies of scale. In the short-run, firms may sometimes choose to operate at a loss (i.e. negative economic profit). O In the short-run, firms in a competitive market can never earn positive profit. QUESTION 9

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