You are hired as a consultant by a struggling firm. This firm currently produces 100 units per day and sells them in a perfectly competitive market at $22 each. At the current output level, total cost is $3000 per day, variable cost is $2,500 per day, and marginal cost is $45.

5a) Depict this firm's production and cost situation using a diagram. Include the market price, average total cost (ATC), average variable cost (AVC), and marginal cost (MC) curves. You may assume ATC and AVC are U-shaped, and that MC is upward sloping.

5b) What is your recommendation to this firm regarding their output level: increase, decrease, or continue with 100 units per day? Briefly explain your reasoning.

5c) Evaluate the following statement, indicating whether you agree or disagree, and why: "Currently variable cost ($2,500) exceeds total revenue ($2,200). The production facility should therefore be shut down immediately".