Jo sells beautiful flower bouquets at the Sunday markets. Assume the market for flower bouquets is perfectly competitive. Jo sells her bouquets at the market price of $50. At the profit-maximising level of 57 bouquets, Jo's average total cost is $41 per bouquet. The minimum average variable cost is $38 per bouquet. Answer the following questions: a. Jo's economic profit or loss is dollars. (use a negative value if a loss). Answer in b. State whether the following statement is true or false: "At the profit-maximising quantity, Jo is making an economic profit of $9 per bouquet." Type T for true, or F for false c. State whether the following statement is true or false: "Jo should shut down if the market price is $40 per bouquet." Type T for true, or F for false

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Profit Maximization

Economic activity is related to the use of scarce resources of the economy that are used for producing goods and services which are required to satisfy various demands of the people. In other words, it can be said that it is all about satisfying the unlimited demands of individuals with the limited resources available. The production decision is taken by the producers or the firms. In economics, the terms ‘producers’, ‘suppliers’, and ‘firms’ are interchangeable. Now the question arises, what does a firm actually mean?