Claude's Copper Clappers Sells Clappers for $60 Each in a Perfectly

question 220

Multiple Choice

Claude's Copper Clappers sells clappers for $60 each in a perfectly competitive market.At its present rate of output, Claude's marginal cost is $65, average variable cost is $25, and average total cost is $62.To improve his profit/loss situation, Claude should

• A)increase output
• B)reduce output but not to zero
• C)maintain the present rate of output
• D)shut down
• E)raise the price

---

Definitions:

Market Equilibrium

A market state where the quantity demanded equals the quantity supplied, leading to no pressure on the price to either rise or fall.

Good

A material item or service that satisfies a want or need and is available for sale or trade.

Deadweight Loss

Deadweight loss represents the efficiency lost to an economy because of market inefficiencies or interventions, where resources are not allocated optimally.

Consumer Surplus

The misalignment between the price consumers are willing to allocate for a good or service and the price they actually allocate.