Claude's Copper Clappers Sells Clappers for $40 Each in a Perfectly

question 60

Multiple Choice

Claude's Copper Clappers sells clappers for $40 each in a perfectly competitive market.At its present level of output,Claude's marginal cost is $39,average variable cost is $25,and average total cost is $45.To improve his profit or loss situation,Claude should _____

• A)increase output.
• B)reduce output but not to zero.
• C)continue to produce the present level of output.
• D)shut down.
• E)raise the price.

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Definitions:

Consideration

In contract law, this is something of value that is exchanged between parties entering into a contract, essential for the agreement to be legally binding.

Gratuitous Promises

Promises made without expecting anything in return, often lacking legal enforceability unless supported by formalities like a deed.

Consideration

Something of value exchanged between parties in a contract, which is necessary for the agreement to be legally binding.

Legal Consideration

A value promised to another party in a contract as an inducement to enter into the contract, which must be present for the contract to be legally binding.