Question 1
Pie-Oh-My, a monopolistically competitive firm, is baking 80 gourmet pies per day and selling each pie for $25. At that production level
ATC is $40,
AVC is $30,
AFC is $10, and both
MR and
MC are $16. This firm should
Question 2
Pie-Oh-My, a monopolistically competitive firm, is producing 80 gourmet pies per day and selling each pie for $32. At that production level
ATC is $40,
AVC is $30,
AFC is $10, and both
MR and
MC are $16. In the short run, this firm should
Answer 1
produce zero pies and pay fixed costs.Answer 2
continue to produce 80 pies, as price is greater than