1.To keep things simple, let's assume that each winemaker has calculated the optimal quan tity to produce if they decide to stay in busi ness; your job is simply to figure out if she should produce that amount or just shut down.

Annual Income Statement When Price = 5 euros Fixed Winemaker Costs Paulette Camille Hortense 50,000 100,000 Costs Variable Recession Revenues Profits 80,000 40,000 200,000 250,000 120,000 70,000 200,000

a. First, calculate each winemaker's profit.

b. Which of these women, if any, earned a profit?

c. Who should stay in business in the short run? Who should shut down?

d. Fill in the blank: Even if profit is negative, if revenues are variable costs, then it's best to stay open in the short run.

e. For which of these wineries, if any, is P > AC?You don't need to calculate any new numbers to answer this.