Suppose That in a Perfectly Competitive Industry,the Market Price of the Product

question 100

Multiple Choice

Suppose that in a perfectly competitive industry,the market price of the product is $6.A firm is producing the output level at which average total cost equals marginal cost,both of which are $8.Average variable cost is $4.To maximize its profits in the short run,the firm should

• A)reduce its output.
• B)expand its output.
• C)leave its output unchanged.
• D)shut down.
• E)There is insufficient information to know.

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Definitions:

Annual Inventory Cost

The total cost associated with holding and managing inventory over a year, including storage, insurance, and depreciation.

Current System

The existing set of procedures, resources, and processes currently in use by an organization or system.

Finished-Goods Inventories

The stock of completed products that are ready to be sold but are still held by the manufacturing company.

FedEx

A multinational delivery services company known for its overnight shipping service and pioneering a system for tracking packages and providing real-time updates on package location.