Suppose That at 500 Units of Output, Marginal Revenue Is

question 321

Multiple Choice

Suppose that at 500 units of output, marginal revenue is equal to marginal cost. The firm is selling its output at $5 per unit, and average total cost at 500 units of output is $6. On the basis of this information, we

• A)can say that the firm should close down in the short run.
• B)can say that the firm can produce and realize an economic profit in the short run.
• C)cannot determine whether the firm should produce or shut down in the short run.
• D)can assume the firm is not using the most efficient technology.

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