4. Deriving the short-run supply curve The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a rm operating in the competitive market for sun lamps. 100 90 30 TO 60 50 40 COSTS (Dollars) 30 20 1D 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of lamps) For every price level given in the following table, use the graph to determine the protmaximizing quantity of lamps for the firm. Further, select whether the rm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the rm is indi'erent between producing zero lamps and the prot-maximizing quantity of lamps.) Lastly, determine whether the rm will earn a prot, incur a loss, or break even at each price. Price Quantity (Dollars per lamp) (Lamps) Produce or Shut Down? Prot or Loss? 15 'V Y Y 20 V V v 25 'V Y Y 55 V V v 70 'V Y v 85 V V 7 On the following graph, use the orange points (square symbol) to plot points along the portion of the firm '5 short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot the points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need. ) C?) 100 El 90 BO Firm's Short-Run Supply 70 so 50 40 PRICE (Dollars per lamp) 30 20 1 0 El | | | | | | | | l l U 10 20 30 40 50 60 70 80 so 100 QUANTITY (Thousands of lamps) Suppose there are 8 firms in this industry, each of which has the cost curves previously shown. On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot these points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need. ) Next, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. Note: Dashed drop lines will automatically extend to both axes. 100 90 Industry's Short-Run Supply 80 Demand 70 Equilibrium 60 50 PRICE (Dollars per lamp) 40 30 20 10 80 160 240 320 400 480 560 640 720 800 QUANTITY (Thousands of lamps)