Terminus sells fencing in a perfectly competitive market. Below are its short-run total variable costs at different output levels. The firm's fixed cost is $20. The fencing sells at $12 per unit. Units Total Variable Cost
0 $0
1 $10
2 $18
3 $26
4 $36
5 $50
6 $70
a. What is the average total cost of the 6th unit of fencing?
b. What is the first unit of output where diminishing marginal returns have begun?
c. What economic profit or loss would Terminus earn at its profit maximum? Show your work.
d. Would Terminus operate in the short run? Explain.
e. Would Terminus stay in the market in the long run? Explain.