Claude's Copper Clappers sells clappers for $40 each in a perfectly competitive market.At its present rate of output, Claude's marginal cost is $39, average variable cost is $45, and average total cost is $60.To improve his profit/loss situation, Claude should

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Claude's marginal cost is $39, which is less than the price of $40, but his average total cost is $60. This means that he is making a loss of $20 per clapper. Therefore, the best choice for Claude is to shut down in the short run until he can figure out a way to reduce his costs or increase the price of his clappers. Neither increasing nor maintaining the present rate of output will improve his profit/loss situation, and reducing output will only worsen it. Raising the price may help, but it is unlikely to overcome the current loss he is facing due to his high average total cost.

Claude's Copper Clappers Sells Clappers for $40 Each in a Perfectly