Consider the total cost and revenue curves shown below, for two perfectly competitive firms, Firm A and Firm B. FIGURE 9- 5
-Refer to Figure 9- 5. Given its total cost and revenue curves, Firm A should
A) maximize its profits by producing that level of output such that the slope of the TC curve is equal to the slope of the TR curve.
B) shut down.
C) maximize its profits by producing that level of output such that the slope of the TVC curve is equal to the slope of the TR curve.
D) continue production, as it is earning positive profits.
E) build another plant to reap scale economies.

Question

Consider the total cost and revenue curves shown below, for two perfectly competitive firms, Firm A and Firm B.  FIGURE 9- 5
-Refer to Figure 9- 5. Given its total cost and revenue curves, Firm A should
A) maximize its profits by producing that level of output such that the slope of the TC curve is equal to the slope of the TR curve. 
B) shut down. 
C) maximize its profits by producing that level of output such that the slope of the TVC curve is equal to the slope of the TR curve. 
D) continue production, as it is earning positive profits. 
E) build another plant to reap scale economies.

Quizplus · Accepted Answer

The Answer of Consider the total cost and revenue curves shown below, for two perfectly competitive firms, Firm A and Firm B.  FIGURE 9- 5
-Refer to Figure 9- 5. Given its total cost and revenue curves, Firm A should
A) maximize its profits by producing that level of output such that the slope of the TC curve is equal to the slope of the TR curve. 
B) shut down. 
C) maximize its profits by producing that level of output such that the slope of the TVC curve is equal to the slope of the TR curve. 
D) continue production, as it is earning positive profits. 
E) build another plant to reap scale economies.

Consider the Total Cost and Revenue Curves Shown Below, for Two