Consider the purely competitive market

4. Deriving the short-run supply curve Aa Aa Consider the purely competitive market for ceiling halogen lamps. 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. COSTS [Dollars per lamp] 100 90 MC 80 70 60 50 ATC 40 AVC 30 20 10 1 2 3 4 5 6 7 B 9 QUANTITY [Thousands of lamps per month] For each price in the following table, use the graph to determine the number of lamps this firm would produce in order to maximize its economic profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero units and the profit-maximizing quantity. Also, indicate for each price whether the firm will produce, shut down, or be indifferent between the two in the short run, and whether it will make an economic profit, suffer a loss, or break even