1. Explain the relationship between price, marginal revenue and average revenuefor a perfectly competitive firm?2. When does a perfectly competitive firm maximize their profits? What theyshould do if at their current production level their marginal revenue is greaterthan marginal cost?3. Explain the difference between a shut-down decision and exiting decision for acompetitive firm? When and how they make such decision?4. Refer to the graph below:Price1918MC1612ATC1 2 3 43 6 1 8 QuantityIn the above graph, assume that the price per unit is $10. Based on thisinformation calculate:a. Profit maximization quantityb. Total revenue at that levelc. Total cost at that leveld. Profit or loss for this firm (if any)Please refer to the discussion board requirement announcement before posting. First postdue on Thursday, May 6th, and reply to two other student's posts due on Sunday, May9th.

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1. Explain the relationship between price, marginal revenue and average revenue for a perfectly competitive firm? 2. When does a perfectly competitive firm maximize their profits? What they should do if at their current production level their marginal revenue is greater than marginal cost? 3. Explain the difference between a shut-down decision and exiting decision for a competitive firm? When and how they make such decision? 4. Refer to the graph below: Price MC 16 ATC 11 345 6 18 Duannity In the above graph, assume that the price per unit is $10. Based on this information calculate: a. Profit maximization quantity b. Total revenue at that level c. Total cost at that level d. Profit or loss for this firm (if any)