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)
Correct Answer:
Verified
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