Suppose that in a perfectly competitive industry,the market price for the product is $130.A firm is producing the output level at which average total cost equals marginal cost,both of which are $138.Average variable cost is $132.To maximize profits in the short run,the firm should

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The firm should produce zero output because the price ($130) is less than the average variable cost ($132), meaning the firm would incur a loss on each unit produced. In the short run, it is better to shut down to minimize losses.

Suppose That in a Perfectly Competitive Industry,the Market Price for the Product