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

question 194

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 $39, average variable cost is $25, and average total cost is $45. To improve his profit/loss situation, 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:

Balance Sheet

A financial report that outlines a corporation's assets, liabilities, and owner's equity at a particular moment.

Interest Receivable

The amount of interest that has been earned but not yet received in cash.

Interest Revenue

Income earned by an entity through investments in interest-bearing financial instruments or accounts.

Debt Investments

Financial assets purchased with the expectation that the loan made to the issuer (such as bonds) will be paid back with interest.