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An exercise from a microeconomics textbook that covers various concepts including the theory of the firm, cost curves, competition, and returns to scale. Students are asked to calculate marginal and average points, understand the shape of the short-run marginal cost curve, determine the production quantity for a competitive firm, and analyze the relationship between long-run and short-run average costs. They are also asked to consider the implications of constant, increasing, and decreasing returns to scale.
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3 1. 4 1. 5 1. 6 2. 7 2. 8 2. 9 3. 10 4. Please figure out the MC, AVC, and AC per bottle at each possible production point listed. If a firm chooses the number of bottles by seeking to maximize profit, how many bottles of soda will you produce if the price is 80 cents per bottle? 49 cents? 34 cents? 20 cents? (If you come up with two possible quantities, choose the larger one.) What have you discovered about the short-run supply curve of a competitive firm and its relation to cost curves?