Sweet Husks is a perfectly competitive corn farm. Currently, the expected price of an ear of corn is $0.30 and, at its current production level, Sweet Husks has a marginal cost of $.40 per ear. Which of the following statements is true?
A) Because the expected profit from an additional ear of corn is $0.70, Sweet Husks should increase production to maximize its expected profit.
B) Because the expected profit from an additional ear of corn is $0.10, Sweet Husks should increase production to maximize its expected profit.
C) Because the expected profit from an additional ear of corn is - $0.10, Sweet Husks should decrease production to maximize its expected profit.
D) Because the expected profit from an additional ear of corn is $0.10, Sweet Husks should decrease production to maximize its expected profit.
Correct Answer:
Verified
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