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Include the average cost and average variable cost curves. Draw so that the marginal cost curve intersects the AVC curve at $175 and the AC curve at $200. Label the equilibrium f1 . (b) On another graph, draw the short run market equilibrium, with price at $175 and 10,000 ights. Label this point F1 (c) How much is each rm producing? Label this. Do rms stay in business? (d) On the market graph, draw the long run supply curve. (e) Explain what happens in the long run. Label the new market equilibrium E1 , and the rm equilibrium e1 . Label the new market equilibrium quantity Q2 . How does the new market equilibrium quantity compare to the old one?
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