A Perfectly Competitive Firm Finds That: Average Total Cost Is

question 211

Multiple Choice

A perfectly competitive firm finds that: Average total cost is $25;
Average variable cost is $15;
Marginal cost is $20 and increasing;
Price of the product is $22.
This firm should

• A)produce more output
• B)raise the price of its product
• C)reduce production without shutting down
• D)shut down (reduce output to zero)
• E)do nothing (it is currently maximizing profit)