Assume That Price Is Greater Than Average Variable Cost

question 91

Multiple Choice

Assume that price is greater than average variable cost.If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54, then to maximise profits the firm should

• A)continue producing at the current output.
• B)produce a larger level of output.
• C)produce a smaller level of output.
• D)There is not enough information given to answer the question.

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Definitions:

Consideration

The value (usually money, service, or goods) exchanged between parties in a contract that compels them to fulfill their mutual obligations.

Preexisting Duty

An obligation that a party is already bound to by law or by some other agreement. The party may not use this as consideration in a new contract.

Promissory Estoppel

A judicial principle that stops one from retracting a pledge given to another if the latter has justifiably depended on the promise to their disadvantage.

Disputed Amounts

Refers to the sums of money under contention between parties in transactions or contracts, often leading to negotiation or legal actions.