The data in Table 13P-3 are the monthly average variable costs (AVC), average total costs (ATC), and marginal costs (MC) for Alpacky, a typical alpaca wool-manufacturing firm in Peru. The alpaca wool industry is competitive. For each market price given below, give the profit-maximizing output quantity and state whether Alpacky’s profits are positive, negative, or zero. Also state whether Alpacky should produce or shut down in the short run.
a. $16.00
b. $18.00
c. $22.00