The graph represents a price-taking firm producing below the AVC curve. Is the firm making a profit, experiencing a loss, or earning a normal profit? Should the firm increase output, decrease output, or shut down? Explain. 
Definitions:
Conceptual Understandings
Relates to grasping the underlying principles and relationships inherent in ideas or information.
Tertiary Circular Reactions
The fifth stage of the sensorimotor period, characterized by the deliberate variation of action sequences to solve problems and explore the world.
Sensorimotor Substages
The phases within Piaget's Sensorimotor stage, illustrating infants' progression in understanding the world through physical interactions.
Sensorimotor Development
involves the process through which infants and young children acquire skills by integrating sensory input with motor actions.
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