Suppose That in a Perfectly Competitive Industry,the Market Price for the Product

question 32

Multiple Choice

Suppose that in a perfectly competitive industry,the market price for the product is $130.A firm is producing the output level at which average total cost equals marginal cost,both of which are $138.Average variable cost is $132.To maximize profits in the short run,the firm should

• A)reduce its output.
• B)expand its output.
• C)leave its output unchanged.
• D)produce zero output.
• E)change the price of the product.

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Definitions:

Tertiary Consumers

Organisms that occupy the top level in a food chain by feeding on secondary consumers; they are typically predators.

Autotrophs

Organisms that can produce their own food from inorganic substances using light or chemical energy such as plants and certain bacteria and algae.

Carbon Fixation

The process by which inorganic carbon (usually in the form of CO2) is converted to organic compounds by living organisms, prominently through photosynthesis in plants.

Photosynthetic Organisms

Organisms that are capable of photosynthesis, a process of converting light energy into chemical energy, primarily occurring in plants, algae, and certain bacteria.