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a) You obtained the following short-run cost information of a firm. When the firm produces 2 units of output, its total cost is $500,040. When the firm produces 10 units of output, its average fixed cost is $50,000. What is the average fixed cost when the firm produces 2 units of output? What is the average fixed cost when the firm produces 5 units of output?
b) A profit-maximizing firm in a perfectly competitive market currently produces at an output level where its short-run average total cost curve is upward sloping. What does this imply about the firm's economic profit?
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