Consider a competitive industry and a price-taking firm that produces in that industry. The market demand and supply functions are estimated to be:

Demand: Q_d= 10,000 10,000P + 1.0M

Supply: Q_s= 80,000 + 10,000P 4,000P₁

where Q is quantity, P is the price of the product, M is income, and P₁ is the input price. The manager of the perfectly competitive firm uses time-series data to obtain the following forecasted values of M and P₁ for 2021:

M = $50,000 andP₁= $20

The manager also estimates the average variable cost function to be

AVC = 3.0 0.0027Q + 0.0000009Q²

Total fixed costs will be $2,000 in 2021. The manager _____ produce since _____________.

should not; $0.50 < $1.00

should not; $2 < $2.15

should; $2.75 > $0.75

should; $3 > $0.975