Assume a Perfectly Competitive Firm Sells Its Output for $250

question 68

Multiple Choice

Assume a perfectly competitive firm sells its output for $250 per unit.At its current 2,000 units of output, marginal cost is $180 and increasing, and average variable cost is $160.Assuming it wants to maximize its profits, it should:

• A)increase output.
• B)decrease output, but not shut down.
• C)maintain its current output rate.
• D)shut down.
• E)There is not enough information to determine what the firm should do.

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