In a 4- to 5-page essay, address the following questions:
1. Give a brief summary of economic costs.
2. Presume a firm is operating at the minimum point of its short-run average total cost curve, so that marginal cost equals average total cost. Under what circumstances would it choose to alter the size of its plant? Describe.
3. In the short-run, why might a firm still operate even when there is a loss?
4. Presume a firm is producing 1,000 units of output (Q). Its average fixed costs are $50. Its average variable costs are $25. What is the total cost (TC) of producing 1,000 units of output (Q)? It the price (P) of the good is $100, what is total revenue? What is total profit?