Farmer Jones Is Producing Wheat and Must Accept the Market

question 135

Multiple Choice

Farmer Jones is producing wheat and must accept the market price of $6.00 per bushel. At this time, her average total costs and her marginal costs both equal $5.00 per bushel. Her minimum average variable costs are $3.50 per bushel. In order to maximize profits or minimize losses in the short run, farmer Jones should

• A)increase selling price.
• B)produce zero output and shut down.
• C)continue producing, but reduce output.
• D)increase output.

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