A Perfectly Competitive Firm Producing 100 Units of Output Per

question 191

Multiple Choice

A perfectly competitive firm producing 100 units of output per period finds that: Average total cost is $20;
Average variable cost is $12;
Marginal cost is $18 and increasing;
Price of the product is $15.
This firm should

• A)produce more output
• B)raise the price of its product
• C)reduce production without shutting down
• D)shut down (reduce output to zero)
• E)do nothing (it is currently maximizing profit)

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