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