Suppose that Andy sells basketballs in the perfectly competitive basketball market. His output per day and his costs are as follows:

a. Suppose the current equilibrium price in the basketball market is $12.50. To maximize profit, how many basketballs will Andy produce, what price will he charge, and how much profit (or loss) will he earn? Draw a graph to illustrate your answer. Label your graph clearly and include: (1) Andy’s demand, ATC, AVC, MC, and MR curves; (2) the price he is charging; (3) the quantity he is producing; and (4) the area representing his profit (or loss).
b. Suppose the equilibrium price of basketballs falls to $6.00. Now how many basketballs will Andy produce, what price will he charge, and how much profit (or loss) will he make? Draw a graph to illustrate this situation, using the instructions in part (a).

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Output per Day 0 1 23WN 4 5 67 6 7 8 9 Total Cost $10.00 20.50 24.50 28.00 34.00 43.00 55.50 72.00 93.00 119.00