Answer
a) The firm is not maximizing profit.
b) The firm is maximizing profit and not in a long run equilibrium.
c) The firm is maximizing profit and not in a long run equilibrium.
d) The firm is maximizing profit and is in a long run equilibrium.
Work Step by Step
a) For the firm to maximize profit, the marginal cost must be less than or equal to price.
b) For the firm to be in the long run equilibrium, the price must increase to the average total cost (or the average total cost must decrease to the price).
c) For the firm to be in the long run equilibrium, the price must decrease to the average total cost (or the average total cost must increase to the price).
d) The firm is in a long run equilibrium since the price is the same as the average total cost.
