Part 3

(2) Calculate the prots under TWO SCENARIOS Note: The Formula for Prot = minus otal Cost where Total Revenue = Price X Quantity = P * Q and where Total Cost = Fixed Cost (rent) + Variable Cost (cost of inputs and labor) A) Calculate the Prot for a rm at a Quantity Supplied of ZERO. This is the "shut down" scenario where no effort is made. (There are quite a number ofrms that are offering to sell 0 units at the market equilibrium price. Evaluate the prots/losses per day incurred by those rms who choose to shut down during their rst month of operation. Is that the "best" option at the market equilibrium price? Yes or no and show why.) (B) For your *own* business (listed above), evaluate your own prots/losses per day at the quantity supplied you posted last week (shown in the table above). Taking the market price as a given, are you doing the best you can do? Do you think there is a better output selection for prot maximization/loss minimization. If you could, would you modify your quantity supplied, given that now you know what the market price is? Or, are you satised with your initial responses and make no changes given the equilibrium price? Have fun! I'm looking forward to reading your responses and what you observe