Graphically show the following firm situation:
a. Show the short run profit graph for a firm subject to some market demand. Depict the production decision point, the price and quantity the firm will operate at and the areas that make up the firms total revenue, total cost, and profit. For “a” you can assume a unitary demand curve and that the firm makes a short run profit.
b. In a separate graph, show a firm that is having to incur a short run loss. Include the production decision point, the price and quantity the firm will operate at, and the areas that make up the firms total revenue, total cost, and loss. You should also include a function (curve) to show at what price our firm would shutdown and leave the market at when producing the same Q* number of units. You can just label the point the shutdown point.