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:

Commercial Tenants

Businesses or individuals that lease or rent commercial property or space from a landlord for business purposes.

Lease Agreement

A contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset for a specified time period.

Fee Simple Absolute

The most complete form of property ownership, giving the owner unrestricted rights to the property, including selling, leasing, or bequeathing.

Conditional Estate

A type of property ownership that is subject to certain conditions or event occurrences; failure to meet these may result in forfeiture of the property.