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A Perfectly Competitive Firm Finds That: Average Total Cost Is

Question 162

Multiple Choice

A perfectly competitive firm finds that: Average total cost is $25;
Average variable cost is $15;
Marginal cost is $20 and increasing;
Price of the product is $22.
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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