Industry at various prices is represented by the table below. 5300 - 5400 - s600 K3 what will the new equilibrium market price be if demand falls? given that new price, how should we react to maximize profit in the short and long run? The new equilibrium price and why that is Short-run - The profit-maximizing level of output at the new equilibrium price - Total Revenue at that level 4000 - Total Cost at that level 4770 - Profit/loss at that level loss of 370 - Discuss if in the short-run the firm would continue to produce or shut-down If the decision is to produce why? (hint: compare current outcome at the new price to the profit/loss if a firm shuts down) If the decision is to shut-down, why? Long-run-will the firm remain in the market or exit and why (remember exit R0 2 3 4 5 6 7 8 9 10 11 12 Total Marginal Average Profit, Q Revenue Revenue, Revenue, TFC TVC TC MC AFC AVC ATC TR=P*Q ATR/AQ, TR/Q TR-TC 0 $0 $- $- 2000 2000 $-2000 500 500 500 2000 500 2500 500 2000 500 2500 -2000 D 1000 500 500 2000 800 2800 300 1000 400 1400 -1800 3 1500 500 500 2000 1000 3000 200 667 333 1000 -1500 2000 500 500 2000 1160 3160 160 500 290 790 -1160 2500 500 500 2000 1340 3340 180 400 268 668 -840 6 3000 500 500 2000 1540 3540 200 333 257 590 -540 3500 500 500 2000 1780 3780 240 286 254 540 -280 4000 500 500 2000 2080 4080 300 250 260 510 80 9 4500 500 500 2000 2410 4410 330 222 268 490 90 10 5000 500 500 2000 2770 4770 360 200 277 477 230 11 5500 500 500 2000 3190 5190 420 182 290 472 310 12 6000 500 500 2000 3760 5760 570 167 313 480 240 13 6500 500 500 2000 4500 6500 740 153 346 500 0 14 7000 500 500 2000 5500 7500 1000 143 393 536 -500