Suppose That When a Perfectly Competitive Firm Produces 500 Units

question 111

Multiple Choice

Suppose that when a perfectly competitive firm produces 500 units of output a day, it earns an economic loss. If the price of each unit of output is $1.50, then, in the short run, it's clear that this firm:

• A)should shut down.
• B)should not shut down if its total variable cost is less than $750.
• C)is not maximizing its profit.
• D)should produce more than 500 units a day.

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