Here is the explanation of the graph: When the market price is higher than the ATC, it means that the company is making a profit. When price equals ATC, the firm reaches the break-even point where total revenue = total cost. When the price is lower than the ATC, it means that the firm is incurring a loss.(4) The producer's objective in the short run is to maximize profits or minimize losses. The rule of maximizing profits or minimizing losses for a firm under conditions of a market of perfect competition is simple and intuitively attractive. The product should be priced at the level where the difference between total revenues and the total cost of producing that product is greatest. In other words, marginal costs equal marginal revenue. Part (B) As we know, the short-run firm has at least one fixed factor and seeks to maximize profit to minimize losses by adjusting the level of production. The company should produce when the difference between total revenue and total cost is profitable or the loss is less than the fixed cost. However, it must stop producing, or even close its doors in the short term, when its losses exceed its fixed costs. By closing its doors, the company's loss will be equal to the fixed costs of production. Part