Suppose That When a Perfectly Competitive Firm Produces 1,000 Units

question 115

Multiple Choice

Suppose that when a perfectly competitive firm produces 1,000 units of output, its total variable cost is $1,900. If the marginal cost of producing the 1,000^th unit is $1.70, and if the market price of each unit of output is $1.70, then the firm should:

• A)shut down.
• B)raise its price.
• C)increase output.
• D)continue to produce 1000 units.

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Definitions:

Climate

The long-term pattern of weather conditions in a particular area, including temperature, precipitation, humidity, and seasonal variations.

Technology

The use of scientific understanding to achieve practical goals, particularly within the industrial sector.

World Price

The global market price of a product or service, determined by worldwide demand and supply.

Import

The process of bringing goods or services into one country from another for the purpose of sale or use, often subject to trade policies and tariffs.