Take a look at panel (a) of Figure 25-5. Suppose that during the relevant time period, the firm's marginal and average variable costs remain unchanged. If the firm had to set the price of its information product equal to marginal cost, what would he the amount of its ecnomic profit or loss following the increase in its total fixed costs?

That are given sentences are(1)

The relationship between $MC$ and $AVC$

Marginal cost (MC) is defined as the value (cost) that produces one additional unit of production, and average variable cost (AVC) is the value of employment (labor) per unit of output (output) generated. Defined as (cost). Relationship between $MC$and $AVC$If the marginal cost is less thanthe average variable cost,the average variable costwill decrease. If the marginal cost is greater thanthe average variable cost,the average variable costwill increase. It isknown that the MC curve intersects the AVC curve at the minimum pointof the AVC curve. At the intersection,$MC$ is equal to AVC.

That are given sentences are (2)

The market forces of supply and demand, and each firm

The price per unit is totally supervised ( or administered) by the market forces of supply and demand, and each firm in the market should sell their goods at this pre-planned (fixed) market price. Marginal revenue (MR) is stated as the extra (added) revenue which a firm gets for selling one extra unit of output, and this occurs in a perfectly competitive market, it equals the price of the goods. The point at which$(MC=ATC)$is known as the break even point.$MC$is not dependent or not related of TFC and thus it is only affected by change in TVC. Suppose in case, if localid="1652463642719" $MR=P$ lies above the break even point, then the firm will control at a profit, as the revenue receive on each unit of production (output) sold will more the AC of manufacturing a unit of output, therefore the total revenue will exceed total cost. On the other hand, if$MR=P$is below thebreak-even point, the revenuefrom eachoutput unitis less than the average cost of producingone unit of output,so the enterprise manages it as a loss. Therefore, the total revenueis lessthan the totalcost. Therefore, from the aboveexplanation, it canbe said that the only pointwhere the marginal costcan be equal to the mean variable orthe mean total cost is the minimum point.