Suppose a Firm Is Operating in a Competitive Market Where

question 44

Multiple Choice

Suppose a firm is operating in a competitive market where the price of the good is $12.If, at the current level of output, the firm's average cost is $15, marginal cost is $17, and fixed costs are $10, then the firm will:

• A)increase profit by increasing output
• B)increase profit by decreasing output
• C)maximise profit by keeping output constant
• D)we cannot say without more information

---

Definitions:

Noncumulative Discounts

Price reductions that are offered on a one-time basis and do not accumulate over time or through additional purchases.

Inventory Carrying Costs

The expenses associated with holding and storing unsold goods or materials, including warehousing, insurance, and spoilage.

Trade Discount

A reduction in the listed price of goods or services offered to traders in the same industry, often as a bulk buying incentive.

Suggested Retail Price

The price that manufacturers recommend retailers sell their products for, aiming to standardize pricing across different locations and outlets.