The firm Sloths Are Best produces food for sloths. The business is operating in a competitive industry and experiences the following:

• marginal revenue = $10
• marginal cost = marginal revenue at $10
• marginal cost = average variable cost at $8
• marginal cost = average total cost at $12

(a) Draw an accurately labeled graph of this firm's production with MC, MR, AVC, and ATC all represented.Label the profit-maximizing quantity Qpm.

(b) Explain how to determine the profit-maximizing level of production.

(c) If the average total cost (ATC) is $14 at the point that MC = AVC, what is the average fixed cost (AFC) at that point?

(d) Is this business experiencing economic profit or loss? Explain.

(e) On your graph from part (a), shade the area of the firm's profit or loss.