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If a Perfectly Competitive Firm with a Known Demand and Random

Question 52

Multiple Choice

If a perfectly competitive firm with a known demand and random marginal cost is producing at a level in which the marginal cost is less than the expected marginal cost and the marginal revenue, which of the following is true?


A) To maximize expected profit, the firm should decrease production by one- half.
B) The firm is maximizing expected profit.
C) To maximize expected profit, the firm should increase production.
D) To maximize expected profit, the firm should decrease production.

Correct Answer:

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