Perfectly competitive firm

 Suppose you are a consultant for a firm that is perfectly competitive. The firm is worried only about its policies in the short run. What would you recommend in terms of quantity changes (raise, cut, shut down, or stay put) and price changes (raise, cut, or stay put) in each of the following situations:

a. [10 points]. P = $19 MC = $14 AVC = $20

b. [10 points]. P = $111 MC = $106 AVC = $107

[Notations/Abbreviations: P = price; MC = marginal cost; AVC = average variable cost]