At a price of $1.80 per pack, the raspberry farm would produce 40 packs by the P = MR = MC rule, giving total revenue of $72 and total cost of $144, an overall loss of $72. If the farm shuts down instead, it pays only its $62 in fixed costs. What should the farm do?

1. Operating at 40 packs gives total revenue of $72 and total cost of $144, an operating loss of $72. 2. At $1.80 per pack, price is below the $2.05 minimum average variable cost at that output, so the firm cannot even cover its variable costs. 3. Shutting down means paying only the $62 in fixed costs, a smaller loss than the $72 lost by operating. 4. Since $62 is a smaller loss than $72, shutting down is preferable, exactly as the source concludes. 5. Having $144 in unavoidable cost is the trap in option B; total cost is not unavoidable, since shutting down eliminates the variable-cost portion of it. _Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 8 "Perfect Competition", section 8.2 | How Perfectly Competitive Firms Make Output Decisions_