Use the graph below for the following three questions:

A graph showing demand (DD) and marginal revenue (MRMR), average total cost (ATCATC), average variable cost (AVCAVC), and short-run marginal cost (MCMC), with quantity (QQ) on the horizontal axis and demand, marginal revenue, and costs in dollars on the vertical axis.DDandMRMRboth have vertical intercepts of $8;MRMRhas horizontal intercept at 80 units andDDhas horizontal intercept at 160 units. AtQ=45Q=45,ATC=MRATC=MRat $3.50; at thisQ,MC=$1.50,AVC=$2,D=$6Q,MC=$1.50,AVC=$2,D=$6.AtQ=60Q=60,MRMR,AVCAVC, andMCMCall intersect at $2; at thisQ,ATC=$3,D=$5Q,ATC=$3,D=$5. AtQ=75Q=75,ATC=MCATC=MCat $3; at thisQ,MR=$0.50,AVC=$2,D=$4Q,MR=$0.50,AVC=$2,D=$4.AtQ=80Q=80,MC=DMC=Dat $4; at thisQ,MR=$0,AVC=$2,ATC=$3Q,MR=$0,AVC=$2,ATC=$3.AtQ=100Q=100,ATC=DATC=Dat $3; at this Q,AVC=$2.50AVC=$2.50.AtQ=105Q=105,AVC=DAVC=Dat $2.50; at thisQ,ATC=$3.25Q,ATC=$3.25.

7. The profit-maximizing level of output is

Select one:

a.

60 units.

b.

105 units.

c.

75 units.

d.

80 units.

8. In the graph above, the firm will sell its output at a price of

Select one:

a.

$3.

b.

$2.

c.

$5.

d.

$6.

9. In the graph above, the firm will be

Select one:

a.

earning positive profit.

b.

earning a loss and should shut down.

c.

breaking even.

d.

earning a loss but should stay open.