Claude's Copper Clappers Sells Clappers for $40 Each in a Competitive

question 408

Multiple Choice

Claude's Copper Clappers sells clappers for $40 each in a competitive price-taker market. At its present rate of output, Claude's marginal cost is $40, average variable cost is $45, and average total cost is $60. Claude should

• A) increase output
• B) reduce output but not to zero
• C) maintain the present rate of output
• D) shut down
• E) raise the price

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Definitions:

Inefficient

Refers to a situation or process that does not maximize the use of resources or achieve the desired outcome effectively.

Attainable

Something that can be achieved, reached, or accomplished with effort and resources available.

Production Possibilities Curve

A graph that shows the maximum number of goods or services that can be produced with limited resources.

Shift Inward

A decrease in the supply or demand of a product, represented by a leftward movement on a graph.