Question: Chapter 11: Problems and Applications #3.3 (you do not need to graph), pg.406.

Frances sells earrings in the perfectly competitive earring market. Her output per day and costs are as follows:

a. If the current equilibrium price in the earring market is $1.80, how many earrings will Frances produce, what price will she charge, and how much profit (or loss) will she make? Draw a graph to illustrate your answer. Your graph should be clearly labeled and should include Frances's demand, ATC, AVC, MC, and MR curves; the price she is charging; the quantity she is producing; and the area representing her profit (or loss).

b. Suppose the equilibrium price of earrings falls to $1.00. Now how many earrings will Frances produce, what price will she charge, and how 'much profit (or loss) will she make? Show your work. Draw a graph to illustrate this situation, using the instructions in question (a).

c. Suppose the equilibrium price of earrings falls to $0.25. Now how many earrings will Frances produce, what price will she charge, and how much profit (or loss) will she make?