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

question 25

Multiple Choice

Suppose product price is fixed at $24; MR = MC at Q = 200; AFC = $6; AVC = $16. What do you advise this firm to do?

• A) Increase output.
• B) Decrease output.
• C) Stay at the current output; the firm is losing $200.
• D) Stay at the current output; the firm is earning a profit of $400.

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Definitions:

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits missed out on.

Tacos

A traditional Mexican dish consisting of a corn or wheat tortilla folded or rolled around a filling, such as beef, pork, chicken, or beans.

Burrito

A Mexican dish consisting of a rolled tortilla filled with various ingredients, typically including beans, cheese, meats, and vegetables.

Constant Rate

A fixed or stable rate that does not change over a specified period of time.