A Profit-Maximizing fiRm Is Producing an Output of 300 Units

question 14

Multiple Choice

A profit-maximizing firm is producing an output of 300 units where price is £10 per unit and average total cost is £8 per unit. Given that the firm operates in a perfectly competitive market, which of the following is likely to be true?

• A) The firm will stop production and exit the market.
• B) The firm will sell each unit of the product at a higher price.
• C) The market supply curve will shift to the right.
• D) The existing firms will exit the industry.

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Definitions:

Magma Chambers

Underground cavities filled with magma that feed volcanic eruptions and are found beneath the Earth's surface.

Continental Collisions

The process where two continental plates collide, leading to the formation of mountain ranges and seismic activity.

Existing Lava Fields

Areas covered by cooled and solidified lava spread over the landscape from previous volcanic eruptions.

Introduction of Water

The process or act of adding or allowing water to enter an environment or system.