The Hilltop Coffee Company is a perfectly competitive firm producing where MR = MC.The current market price of a tall café latte is $5.00.Hilltop sells 200 tall café lattes.Its AVC is $8.00 and its AFC is $3.00.What should Hilltop do?
A) Continue to produce because price exceeds AFC.
B) Increase production so that AFC will decrease.
C) Decrease production so that AVC will decrease.
D) Shut down and produce zero café lattes because price is less than AVC.
Correct Answer:
Verified
Q235: At an output of 6,ATC = $30,MC
Q236: At an output of 19,MC = $39
Q237: At an output of 55,AVC is $41
Q238: At an output of 10,ATC is $9
Q239: In the long run a perfect competitor
Q241: Losses are always minimized when _ equals
Q242: Marginal cost is the _;marginal revenue is
Q243: A profit-maximizing firm will always operate at
Q244: A perfect competitor will operate at peak
Q245: Profits are zero when _ = _
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