Consultant for firm that is perfectly competitive

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Examine whether each of the following statements is true or false. Explain. a. [15 points] If MC is less than ATC then AVC falls as output rises. b. If MC exceeds AVC then ATC rises as output rises. [Notations/Abbreviations : MC = marginal cost; AVC = average variable cost; ATC = average total cost] Question 2. Suppose you are a consultant for a firm that is perfectly competitive. The firm is worried only about its policies in the short run. What would you recommend in terms of quantity changes (raise, cut, shut down or stay put) and price changes (raise, cut, stay put) in each of the following situations: a. P=$27 MC=$12 AVC=$33. b.[10points] P=$99 MC=$54 AVC=$63.

Reference no: EM131102489

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