Question: The accompanying graph summarizes the demand and costs for a firm that operates in a perfectly competitive market.

1. What level of output should this firm produce in the short run?
2. What price should this firm charge in the short run?
3. What is the firm’s total cost at this level of output?
4. What is the firm’s total variable cost at this level of output?
5. What is the firm’s fixed cost at this level of output?
6. What is the firm’s profit if it produces this level of output?
7. What is the firm’s profit if it shuts down?
8. In the long run, should this firm continue to operate or shutdown?

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