You should be able to answer each of the following questions in a just a few…

You should be able to answer each of the following questions in
a just a few sentences. Graphs or figures might be good to include
if they help you to make a better argument or to explain your
answer more clearly.
1. Skip and Peggy are brother and sister and they fight about
everything. Skip says that perfectly competitive firms maximize
profit where marginal revenue equals marginal cost. Peggy says
perfectly competitive firms maximize profit where price equals
marginal cost. Settle this sibling rivalry once and for all.
2. Gisella runs a small stand selling lemonade in a perfectly
competitive market. Her husband, Dustin, tells her that forecasted
cold weather is going to lower the market price for the day and
that she is likely to lose money today if she opens her stand. He
suggests that she shuts down for the day (i.e., the short run) to
avoid the negative profit. Is he right? Why or why not?