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19 May, 21:42

A company produces at an output level where marginal revenue is equal to marginal cost and has the following revenue and cost levels: Marginal cost curve intersects the average variable cost curve at $150. Marginal cost curve intersects the average total cost curve at $200. Marginal cost curve intersects the marginal revenue curve at $170. What would you suggest this firm should do in the short run

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  1. 20 May, 01:07
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    The firm should continue to produce at a loss.

    Explanation:

    As long as intersection of Marginal cost curve and marginal revenue curve is above the $150, it is advisable for firm to continue its operations since in case of shut down it would be bearing a loss of whole fixed cost
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