Consider the Following Total Cost Schedule for a Perfectly Competitive

question 94

Multiple Choice

Consider the following total cost schedule for a perfectly competitive firm producing ball-point pens.
TABLE 9-3
-Refer to Table 9-3.Suppose the prevailing market price for this firm's product is $0.14 and the firm is currently producing 20 units of output.This competitive firm wishing to maximize profits would

• A)increase output because marginal revenue is greater than marginal cost.
• B)decrease output because marginal revenue is less than marginal cost.
• C)increase output because marginal revenue is less than marginal cost.
• D)decrease output because marginal revenue is greater than marginal cost.
• E)produce zero output because price is less than the minimum average variable cost.

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Definitions:

Feedback Control

A system or process that regulates itself by monitoring its own output and feeding back information to make adjustments.

Internal Control

Mechanisms or procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Hot Stove Rule

A principle in management and discipline that suggests consequences should be immediate, consistent, impersonal, and close to the action of misconduct, akin to touching a hot stove.