Consider a perfectly competitive firm who rents a factory outlet for 2000. To produce 800 units

of commodity X, the firm is incurring a labour cost of 1000. The other raw material costs 600.

If the market price for commodity X is 5. Calculate:

(a) Total Revenue (TR) and profit () the firm can earn.

(b) Now, if the firm faces a price drop to 3, whether the firm should produce or not? If

yes/no. Why?