14. Profit maximization and shutting down in the short run Suppose that the market for black sweaters is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. 5U :15 40 35 3\" ATC 25 20 15 PRICE (Dollars per sweater) 10 AVG 0 l l I l I i l I i l 0 2 4 6 8 1o 12 14 16 18 20 QUANTITY (Thousands of sweaters) For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting dOWl it will produce. (Hint: You can select the purple points [diamond symbols] on the graph to see precise information on average variable cost.) Price Quantity Total Revenue Fixed Cost Va ria ble Cost Profit (Dollars per sweater ) (Sweaters) (Dollars) (Dollars) (Dollars) (Dollars) v S | | | | v S | | | | _v E | | | | If the firm shuts down, it must incur its xed costs (FC) in the short run. In this case, the firm's fixed cost is $135,000 per day. In other words, if it shuts down, the rm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease). . This firm's shutdown pricethat is, the price below which it is optimal for the firm to shut downis V per sweater