Economics

A.  Demonstrate graphically and explain verbally where the level of output should be when a perfectly competitive firm is earning a positive economic profit.  Be sure to label the profit maximizing level of output and shade in the area that represents profit.

B.  Show and explain the situation in which a profit maximizing, perfectly competitive firm is earning a negative profit and chooses to continue to produce in the short-run.

C.  Show and explain how B would change if the firm chose to shut down.  What would have to happen to cause the firm to shut down.

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