14. Prot maximization and shutting down in the short run Suppose that the market for frying pans is a competitive market. The following graph shows the daihlr cost curves of a rm operating in this market. 100 'TC PRICE (Dollars per pan) AVG o 5 lo 15 2o 25 so 35 4o 45 so QUANTITY {Thousands of pans} For each price in the following table, calculate the firm '3 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 down, it will produce. (Hint: You can select the purple points [diamond symbols} on the graph to see precise information on average variable cost. J Price Quanlitv Total Revenue Fixed Cost Variable Cost Profit ( Dollars per pan) (Pans) (Dollars) (Dollars) (Dollars) (Dalia rs) If the rm shuts down, it must incur its xed costs (FC) in the short run. In this case, the firm's xed cost is $1,600,000 per day. In other wordsr if it shuts down, the rm would suffer losses of $1,600,000 per dayI until its xed costs end (such as the expiration of a building lease). This rm's shutdown pricethat is. the price below which it is optimal for the lm to shut downis V per pan