2. The S.G. Allen Fabric Company sells cotton fabric in a perfectly competitive market at a price of $4 per yard. Its marginal cost, average variable cost, and average total cost curves can be seen below: MC price ATC 4 d=MR .AVC a. Find the profit-maximizing level of output and mark it q*. Shade in the area of profit earned by the firm. Is it positive or negative? Should the firm continue to operate in the short run? b. What's happen to the market for cotton fabric from the short run to the long run? Would any other firms enter this market? c. What's happen to the price level and profit for this company from the short run to the long run?l. The Lotsa Pasta Company sells pasta in a perfectly competitive market at a price of $2 per pound. Its shortnrun marginal oost, average variable cost, and average total cost curves can be seen below: price I MC MC d=MR q a. Find the prot-maximizing level of output and mark it q* in the short-run. Shade 111 the area of prot earned by the rm. b. Is the prot positive or negative? c. Should the rm shut doWn or not? d. What's happen to the market price from the short run to the long run? Would any other rms enter this market from the short run to the long run? What's happen to the price level and prot in the long run