Suppose a Perfectly Competitive Firm Is Producing a Level of Output

question 86

Multiple Choice

Suppose a perfectly competitive firm is producing a level of output for which price equals average total cost, and average total cost is less than marginal cost. In order to maximize its profits, the firm should

• A) shut down.
• B) not change its output.
• C) reduce its output.
• D) increase the market price.
• E) expand its output.

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Definitions:

Synchronous Communication

Synchronous communication refers to real-time exchanges where participants are present at the same time, such as in meetings or live chats.

Audio Conference

A telecommunication method that allows multiple people to participate in a conversation over audio channels without being in the same location.

Asynchronous Communication

Communication where exchange of information does not occur in real-time, allowing participants to respond at their own convenience.

Electronic Mail

A technique for sending messages to others using digital devices, often referred to as email.