2) Why would a rm that incurs losses choose to produce rather than shut down? 3) Indicate whether the following statement is TRUE or FALSE and explain your answer: Since rms in perfect competition can enter and exit the market in the long run, their economic prots are zero in the long run. 4) MULTIPLE CHOICE (identify the one best answer below and expiain your reasoning for each option]: Read the question carefully! If a prot-maximising, perfectly competitive rm is producing a quantity at which price is higher than average total cost but iower than average variable cost, then a. keep producing both in the short run and in the long run b. keep producing in the short run but exit the market in the long run c. shut down in the short run but return to production in the long run (I shut down in the short run and exit the market in the long run e. Such situation cannot occur. PART B (INDEPENDENT THINKING AND APPLICATION] 5] {KEY QUESTION) A small town is served by many perfectly competing supermarkets, which have constant marginal cost. 3. Using a diagram of the market for groceries, Show the (long-run] equilibrium price and quantity. b. Mark the deadweight loss in the picture and explain what it is. c. Show the consumer and producer surplus in the gure, and explain what these terms mean