5. Profit maximization and shutting down in the short run Suppose that the market for frying pans is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. 100 90 TC 70 60 50 30 AVC 20 10 0 5 10 20 25 30 35 40 4 60 QUANTITY (Thousands of pans) For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous 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 previous graph to see precise information on average variable cost.) Price (Dollars per pan) 25.00 70.00 100.00 Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars) (Dollars) 1,600,000 1,600,000 1,600,000 (Pans) (Dollars) (Dollars) If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $1,600,000 per day. In other words, if it shuts down, the firm would suffer losses of $1,600,000 per day until its fixed costs end (such as the expiration of a building lease) This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is per pan