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25 May, 00:34

A competitive firm maximizes profit at an output level of 500 units, market price is $15.00, and ATC is $15.75. At what range of AVC values for an output level of 500 would the firm choose not to shut down in the short run?

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  1. 25 May, 00:55
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    AVC < $15.00

    Explanation:

    A firm will continue to produce as long as total revenue covers total variable costs or price per unit > or equal to average variable cost (AR = AVC).
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