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  1. business
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  3. (15%) assume a competitive firm incurs fixed costs

(15%) Assume a competitive firm incurs fixed costs and increasing marginal cost. (straight line) ...

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Accounting

(15%) Assume a competitive firm incurs fixed costs and increasing marginal cost. (straight line)
(a)(11%) Graphically illustrate the case in which the firm will make a short-run decision to shut down. (Please label demand, MR, MC, ATC, AVC in the figure)(Please employ U-shaped ATC and AVC to answer this question)
(b)(4%) Based on your figure, please indicate the area representing the profit (loss) for the firm if the firm did not shut down (2%), and the profit (loss) if the firm did shut down. (You may need to properly label your figure to answer this question.)
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