The Ajax Manufacturing Company Is Selling in a Purely Competitive

question 106

Multiple Choice

The Ajax Manufacturing Company is selling in a purely competitive market. Its output is 100 units, which sell at $4 each. At this level of output, total cost is $600, total fixed cost is $100, and marginal cost is $4. The firm should

• A)reduce output to about 80 units.
• B)expand its production.
• C)continue to produce 100 units.
• D)produce zero units of output.

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Definitions:

Lump Sum

A one-time transaction made at a specific moment, rather than several payments spread across a period.

Withdraw

To remove funds from a bank account or investment.

Semi-Annually

Occurring or done every six months or twice a year.

Annual Payments

Payments made once a year as part of a financial agreement, such as loans, annuities, or investments.