The Equilibrium Price of a Guidebook Is $35 in the Perfectly

question 229

Multiple Choice

The equilibrium price of a guidebook is $35 in the perfectly competitive guidebook industry. Our firm produces 10,000 guidebooks for an average total cost of $38, marginal cost of $30, and average variable cost of $30. Our firm should:

• A) raise the price of guidebooks, because the firm is losing money.
• B) keep output the same, because the firm is producing at minimum average variable cost.
• C) produce more guidebooks, because the next guidebook produced increases profit by $5.
• D) shut down, because the firm is losing money.

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Definitions:

Executor

A person named in a will or appointed by a court to administer the estate of a deceased person.

Liquidated

The process of converting assets into cash, often referring to the disbanding of a company and selling off its assets.

Reimbursed

The process of compensating someone for an expense they have incurred.

Patent Infringement

The act of using or selling a patented invention without permission from the patent holder, violating the patent's exclusive rights.