The Equilibrium Price of a Guidebook Is $35 in the Perfectly

question 229

Multiple Choice

The equilibrium price of a guidebook is $35 in the perfectly competitive guidebook industry. Our firm produces 10,000 guidebooks for an average total cost of $38, marginal cost of $30, and average variable cost of $30. Our firm should:

• A) raise the price of guidebooks, because the firm is losing money.
• B) keep output the same, because the firm is producing at minimum average variable cost.
• C) produce more guidebooks, because the next guidebook produced increases profit by $5.
• D) shut down, because the firm is losing money.

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Definitions:

Negative Reinforcement

A behavioral principle where the removal of an unpleasant stimulus strengthens a behavior or makes it more likely to occur.

Aspirin

A medication used to reduce pain, fever, or inflammation.

Headache

A common physical ailment characterized by pain in the head or neck region, with various causes and degrees of severity.

Primary Punishers

Stimuli that are naturally aversive or unpleasant and can decrease the likelihood of a behavior occurring again.