Answer the following questions based on the

graphs above:

1) What quantity will the firm produce in order to maximize profits? Fully detail and explain why a firm would produce that specific quantity. In addition, why would the firm not produce a lower quantity or higher quantity. (Write a minimum of two sentences explaining

your answers)

2) What is the exact economic profit for the firm at the profit maximizing quantity. (Type your calculations for full credit)

3) Explain why the firm chooses to operate, given their current economic profit. Explain when the firm would choose to shut down? (Write at least one paragraph explaining your answers for full credit)

The following graph illustrates a perfectly competitive industry and firm operating in a perfectly competitive market. The fixed costs for the firm are $478.80: Industry Firm MC ATC 98.4 96 84 -. -P-MR AVC 42.72 12,000 12 19.2 21.6