In the November 03, 2020 issue of theChicago Tribunenewspaper, there was a story with the title "American Airlines slashes 100,000 flights in December..." (you do not have to read the article in order to answer the question. The title tells you all that you need to know).

• Using the same ATC, AVC, and MC curves on the graph with$on the vertical axis and individual firm outputqon the horizontal axis, draw the newP₁you determined in Question 2 above. Assume this newP₁is above minimum AVC but below minimum ATC. What is the new profit maximizing outputq₁for this typical firm?
• At the new price ofP₁, is this new outputq₁consistent with the Chicago Tribune description of how an airline is responding to industry conditions? Explain.
• Graphically depict the size of profits or losses (negative profits) at the new priceP₁. Is the firm making positive or negative profits?

Explain why this graphical representation of profits correctly depicts the profit made by the firm in Fall 2020.