If a Profit-Maximizing Firm Finds That Price Exceeds Average Variable

question 23

Multiple Choice

If a profit-maximizing firm finds that price exceeds average variable cost and that marginal revenue exceeds marginal cost, it should:

• A)reduce output but continue producing in the short run.
• B)increase its output.
• C)shut down.
• D)not alter its production level since it is earning a profit.
• E)increase the price of its product.

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