Section 1 - Solving a problem on perfectly competitive firm

Solve the following problem that involves a perfectly competitive firm:

Florea is a seller in the perfectly competitive handmade necklace market. Her output per day and her costs are as follows:

Output per Day	Total Cost
0	$ 13.00
1	18.00
2	22.00
3	25.00
4	27.00
5	30.00
6	35.00
7	44.00
8	55.00
9	67.00

(a) If the current equilibrium price in the necklace market is $ 8.00, how many necklaces will Florea produce, what price will she charge, and how much profit (or loss) will she make? Draw a graph to illustrate your answer. Your graph should be clearly labeled and should include Florea's demand, ATC, AVC, MC, and MR curves; the price she is charging; the quantity she is producing; and the area representing her profit or loss.You will have to create separate columns for Price or Demand or Marginal Revenue, ATC, AVC and MC so that you could draw them.

(b) Suppose the equilibrium price of necklace falls to $ 5.00. Now how many necklaces will Florea produce, what price will she charge, and how much profit or loss will she make? Show your work. Draw a graph to illustrate this situation, using the same instructions from part (a).

(c) Finally, suppose the equilibrium price of necklace falls to $3.00. Now how many necklaces will Florea produce, what price will she charge, and how much profit or loss will she make?