Problem
1. What is the relationship between the market price and marginal cost when a perfectly competitive firm is maximizing its profit?
2. A firm operating at a loss will decide whether to shut down based on the relationship between the market price and the firm's average variable cost. When will a firm choose to operate? Why does a firm ignore its fixed cost when making this decision?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.