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3. A firm in a perfectly competitive market will produce no output in the short run...

3. A firm in a perfectly competitive market will produce no output in the short run if the price is below $18 but will produce if the price is above $18. The smallest quantity they will produce in the short run is 8. Firms will earn 0 economic profit if the price is $74 and its profit maximizing quantity is 12 at that price. The firm’s fixed cost is $576. Assume the good can be produced in continuous quantities.

Draw a picture of the MC, ATC, and AVC for this firm specifically labeling the values for each of these costs at q = 12 and q = 8. Round any decimal answers to 1 place. The diagram does not need to be to scale but needs the curves to exhibit the correct qualities. (2 points)

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