Consider the Following Cost Curves for Two Perfectly Competitive Firms,A

question 57

Multiple Choice

Consider the following cost curves for two perfectly competitive firms,A and B. FIGURE 9-3
-Refer to Figure 9-3.If Firm B is producing at output level q₂,and selling its output at p₀,then Firm B should

• A)remain at this output level because profits are maximized when SRAVC is at its minimum.
• B)expand output to q₁ because profits are maximized when SRATC is at its minimum.
• C)shut down because at this price and output level the firm is suffering losses.
• D)expand output to q₀ so that profits will be maximized.

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