A Firm Sells a Product in a Purely Competitive Market

question 134

Multiple Choice

A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 1,000 units is $2.50. The minimum possible average variable cost is $2.00. The market price of the product is $2.50. To maximize profits or minimize losses, the firm should

• A) continue producing 1,000 units.
• B) continue production, but produce less than 1,000 units.
• C) increase production to more than 1,000 units.
• D) shut down.

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