ESSAY. Write your answer in the space provided or on a separate sheet of paper. 1) True or False: If a firm doesn't make an economic profit, it will shut down. Explain why 2) Explain why shutting down and going out-of-business are different concepts. P MC 10 AC 8. AVC 4 510 35T 50160 Q 40 55 3) The above figure shows the cost curves for a typical firm in a competitive market. a) From the graph, estimate the firm's profits when price equals $10 per unit. b) If the fixed costs equal 300, calculate the firm's profits when the price is 4. 4) Suppose a firm has the following total cost function TC = 100 + 2q2. If price equals $20, what is the firm's output decision? What are its short-run profits? Hint: Calculate MR and MC and set them equal to each other to solve for q*