The market price in a perfectly competitive industry is P=$115.
Suppose that you have estimated the AVC function for a perfectly competitive firm to be:

AVC = 125-.21Q +.0007Q2
Total fixed cost equal $3,500.
a. Find the profit maximizing output for this perfectly competitive firm at the market
price.
b. Calculate total revenue at the profit maximizing output.
c. Calculate total variable costs at the profit maximizing output.
d. Calculate profits at the profit maximizing output.
e. Should this firm produce at the profit maximizing output or should it shut down? Justify
your answer in words and by using numbers, not just by reporting a rule.
f. Calculate the unique market price below which the firm should shut down. Is your answer
in part e consistent with what you have just found in part d?