22 . Problems and Applications Q8 The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be equal to average variable cost. The price of fertilizer must be less than marginal cost. The price of fertilizer must be less than average total cost. The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves. Firm Price and Costs Quantity MC ATC AVC P 1 P 2 Market Price Quantity Demand S 1 S 2 P 1 P 2 If firms in the market are producing output but are currently making economic losses, illustrates the present situation for the typical firm in the market, and indicates the corresponding supply curve. Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. Average total cost will increase. Marginal cost will increase. The quantity supplied by each firm will increase. The total quantity supplied to the market will increase. The price of fertilizer will decrease.