(1) (C) P ($/unit) (A) P (B) P P1 P1 P1 TR TC q1 Q q1 Q q1 Q (2) Q P P MR-MC is the point of maximum profit or minimum loss, if the firm continues to operate (C) P ($/unit) (A) P (B) P TR – TC = Economic Profit MC MC MC P1 D=MR =AR P1 P1 D=MR =AR D=MR =AR ATC ATC ATC ATC1 ATC1 AVC TR TC AVC AVC q1 Q q1 Q q1 Q (2) Normal Profit (TR – TC = Zero Economic Profit) Q P P P ($/unit) MC MC MC Breakeven Point ATC ATC ATC ATC2= ATC2= P2 P2 P2 D=MR =AR D=MR =AR D=MR =AR TR TC AVC AVC AVC q2 Q q2 Q q2 Q

(3) P P P ($/unit) P3 P3 P3 TR TC q3 q3 q3 Q Q Q (4) TR-TC = Economic Loss P ($/unit) MC MC MC ATC ATC ATC ATC3 ATC3 P3 P3 P3 D=MR=AR D=MR=AR D=MR=AR AVC AVC AVC TR TC q3 q3 q3 Q Q Q (4) P<AVC; Shut Down (TR<VC, so loss is smaller by not even operating) P ($/unit) P P MC MC MC ATC ATC ATC Shutdown Point AVC AVC AVC P4 P4 P4 D=MR=AR D=MR=AR D=MR=AR Q Q Q