When marginal cost is rising but is less than average total cost, we are definitely below the ( LO3) a) shut-down point b) break-even point c) maximum profit point

The given statement states that the marginal cost is rising and is less than the average total cost. We must analyze how this affects the shut-down, break-even, and maximum profit points.

Recall the following relationships: - At the shut-down point, the revenue from each additional unit can cover the variable costs but is insufficient to cover the fixed costs. The firm's Price (P) is equal to its Average Variable Cost (AVC): \( P = AVC \). - At the break-even point, the revenue from each additional unit exactly covers the total cost (fixed and variable). This means that Price (P) is equal to the Average Total Cost (ATC): \( P = ATC \). - At the maximum profit point, the difference between total revenue and total cost is the greatest. This happens when the Marginal Cost (MC) is equal to the Marginal Revenue (MR): \( MC = MR \). Consider the points when MC < ATC: - When MC is less than ATC, and both cost curves are rising, it means that we are not at the maximum level of average total cost. We are still in the range where producing additional units can lower the average total cost. - It is not clear if the Price (P) is equal to ATC or not. Hence, we are unsure about the break-even point.

a) Shut-down point: We are not given enough information to determine whether it is a shut-down point or not, based on the given statement. b) Break-even point: We cannot conclude that the price is equal to the average total cost based on the given statement alone. So, we are not definitively at the break-even point. c) Maximum profit point: In the given statement, MC is rising and less than ATC. The maximum profit point happens when MC is equal to MR. However, in this case, the MC is not mentioned to be equal to the Marginal Revenue (MR). So, we are not definitely at the maximum profit point. Based on the analysis, none of the given answer choices can be definitively concluded from the statement provided in the exercise.