For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Quantity ( Dollars per shirt) (Shirts) Produce or Shut Down? Profit or Loss? 10 20 32 40 50 60On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) 100 -O Firm's Short-Run Supply 80 70 80 50 PRICE (Dollars per shirt) 40 30 20 10 O 5 10 15 0 25 30 35 40 45 50 QUANTITY (Thousands of shirts) Suppose there are 5 firms in this industry, each of which has the cost curves previously shown. On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need. ) Then, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. Note: Dashed drop lines will automatically extend to both axes.100 Industry's Short-Run Supply 80 Demand 70 Equilibrium 60 50 PRICE (Dollars per shirt) 40 30 20 10 0 25 50 100 125 150 175 200 225 250 QUANTITY (Thousands of shirts) At the current short-run market price, firms will in the short run. In the long run,4. Profit maximization and shutting down in the short run Suppose that the market for dress shirts is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. 45 40 35 ATC 25 PRICE (Dollars per shirt) 20 15 AVC 10 MC 2 6 8 10 12 14 16 18 20 QUANTITY (Thousands of shirts)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 preceding 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 Quantity Total Revenue Fixed Cost Variable Cost Profit ( Dollars per shirt) (Shirts) (Dollars) (Dollars) (Dollars) (Dollars) 12.50 135,000 27.50 135,000 45.00 135,000 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 $135,000 per day. In other words, if it shuts down, the firm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown point-that is, the price below which it is optimal for the firm to shut down-is per shirt.5. Deriving the short-run supply curve Consider the perfectly competitive market for dress shirts. 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. 100 70 ATC 50 COSTS (Dollars) 40 30 20 AVC MC O 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of shirts)