Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. For each price in the following table, use the graph to determine the number of jackets this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero jackets and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price.PriceQuantityProduce or Shut Down?Profit or Loss?(Dollars per jacket)(Jackets)4 8 12 36 48 60 On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) b. Answered: Consider the competit X* MindTap - Cengage LearningA ng.cengage.com/static/nb/ui/evo/index.html?deploymentld=59828118170010561930692029148&elSBN=9780357133606&snapshotld=2556323&id=1270090816&E Apps M GmailYouTube A Maps A clickserve.dartsearc.E Reading list«* CENGAGE MINDTAPQ Search this courseLove vA My HomeHomework (Ch 14)охCourses(?)O Catalog and Study ToolsA-ZEE Rental Options80P College Success Tips7264Career Success Tips56? Help48O Give Feedback40АТС3224bongo16AVCMC O8162432404858647280QUANTITY (Thousands of jackets)5:42 PMP Type here to searchL18%44°FO O O 4)12/8/2021COSTS (Dollars)x ... b. Answered: Consider the competit X* MindTap - Cengage LearningA ng.cengage.com/static/nb/ui/evo/index.html?deploymentld=59828118170010561930692029148&elSBN=9780357133606&snapshotld=2556323&id=1270090816&E Apps M GmailYouTube A Maps A clickserve.dartsearc.E Reading list«* CENGAGE MINDTAPQ Search this courseLove vA My HomeHomework (Ch 14)On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that correspondsCoursesto prices where there is positive output. (Note: You are given more points to plot than you need.)O Catalog and Study Tools(?)A-ZEE Rental OptionsP College Success Tips8072Career Success TipsFirm's Short-Run Supply64? Help56O Give Feedback484032bonge24188162432404856647280QUANTITY (Thousands of jackets)5:43 PMP Type here to searchL19%44°FO O O 4)12/8/2021PRICE (Dollars per jacket)x ...

The total cost incurred by a firm operating in a market includes fixed costs and variable costs. Fixed costs are the costs that do not change when there is a change in the quantity of output. Variable costs will change when there is a change in the quantity of output. Marginal cost is the cost of producing one more unit of the output. Marginal revenue is the revenue earned from the sale of one more unit of output.In a competitive market, the profit is maximized at the level of output where the marginal cost is equal to the marginal revenue. The marginal revenue is equal to the price. Therefore the quantity produced at each price can be found by looking at the marginal cost curve. Firms will produce output as long as the price is at least equal to the minimum of average variable cost. When the price is less than the average variable cost, the firms will shut down. Firms will earn a profit when the price is greater than the average total cost, loss when the price is less than the average total cost, and will break even when the price is equal to the average total cost. Price($) Quantity Produce/shut down Profit/loss 4 24 shut down loss 8 32 shut down loss 12 0 or 36 produce loss 36 48 produce break-even 48 52 produce profit 60 56 produce profit At price 12, the average variable cost is equal to the price. Therefore the firm is indifferent between producing 36 units and zero units. When there are two levels of outputs where marginal cost and price are equal, the increasing portion of the marginal cost curve is considered. The short-run supply curve is the portion of the marginal cost curve above the minimum of the average variable cost.