5. Deriving the short-run supply curve Consider the perfectly competitive market for dress shirts. The following graph shows the marginal cost (MC ), average total cost (ATC ), and average variable cost (AVC ) curves for a typical firm in the industry. ? 100 8 : 8 8 8 8 ATy PRICE AND COST PER UNIT (Dollars) 7 MC 5 10 15 20 25 30 35 40 45 50 QUANTITY OF OUTPUT (Thousands of shirts) For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the loss-minimizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Output (Dollars per shirt) Shirts) Produce or Shut Down? Profit or Loss? 10 20 32 40 50 60On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) 100 -O 90 Firm's Short-Run Supply 80 70 60 PRICE (Dollars per shirt) 50 40 30 20 10 5 10 15 20 25 30 35 40 45 50 QUANTITY OF OUTPUT (Thousands of shirts) Grade It Now Save & Continue Continue without saving6. Short-run perfectly competitive equilibrium Consider a perfectly competitive market for wheat in San Diego. There are 90 firms in the industry, each of which has the cost curves shown on the following graph: ('2) 10!! MC COST [Genus per bushel] a. 0 AVG 1D I} D 5 1D 15 21: 25 30 35 ID '5 50 QUANTITY OF OUTPUT {Thousands ofbushels] The following graph shows the market demand for wheat. Use the orange points (square symbol) to plot the short-run industry supply curve for the wheat industry. Specically, place an orange point at the lowest point of the supply curve and another orange point at the highest point of the supply curve. (Note: You can disregard the portion of the supply curve that corresponds to prices where there is no output, since this is the industry supply curve. Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.) Then, 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 Demand -O 90 80 Supply Curve 70 Equilibrium 50 40 PRICE (Cents per bushel) 30 20 10 0 450 900 1350 1800 2250 2700 3150 3600 4050 4500 QUANTITY OF OUTPUT (Thousands of bushels) At the current short-run market price, firms will in the short run. In the long run, the market given the current market price