a. What are the market’s equilibrium price and quantity? (2 pts)  

b .What is the firm’s equilibrium price? (2 pts)

c .What is the firm’s cost (total cost, the variable cost, and fixed cost)? (3 pts)

d .What is the firm’s average cost (average total cost and average variable cost)? (2 pts)

e .What is the firm’s marginal cost? (2 pts)

Part 2: Suppose the price falls to $40. (4 total points)

 

a. Calculate the firm’s total cost, total revenue, and profit. (2 pts)  

b. Should the firm operate at the new price level? Why? (2 pts)

Part 3:  Determine the shutdown point and calculate the firm’s profit. Should the firm stay in the market at the shutdown point? Why? (10 points)