The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 10.5 Price B P₁ D A E MC 0 Q1 Q₂ Quantity MC: Marginal cost curve MR: Marginal revenue curve. ATC: Average-total-cost curve AVC: Average-variable-cost curve ATC AVC MR Assume the price facing the firm in Figure 10.5 is P1. Which of the following statements is true? The firm should shut down because price per unit received is less than average total cost. Total revenue for the firm is area OBDQ1- Total cost for the firm is area OP EQ- The firm's total revenue is more than sufficient to cover its variable costs, so it should remain in operation. The firm should produce Q2-

Your company operates in a perfectly competitive market. You have been told that advertising can help you increase your sales in the short run. Would you create an aggressive advertising campaign for your product?