Suppose Product Price Is Fixed at $24; MR = MC

question 374

Multiple Choice

Suppose product price is fixed at $24; MR = MC at Q = 200; AFC = $6; AVC = $25. What do you advise this firm to do?

• A) Increase output.
• B) Decrease output.
• C) Shut down operations.
• D) Stay at the current output; the firm is earning a profit of $1,400.
• E) Stay at the current output; the firm is losing $1,400.

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Definitions:

Equity Theory

A theory in social psychology that posits individuals assess the fairness of their relationships by analyzing their input to and output from said relationships relative to others'.

Severe Inequity

Extreme unfairness or imbalance in the way resources, opportunities, or treatments are distributed among individuals or groups.

Relationship

A connection, association, or involvement between two or more individuals, which can encompass a wide range of interactions from familial and platonic to romantic.

Long-Term Relationships

Relationships characterized by a significant duration and often involving a deep emotional connection and commitment.