Sweet Husks is a perfectly competitive corn farm. Currently, the expected price of an ear of corn is $0.40 and, at its current production level, Sweet Husks has a marginal cost of $.30 per ear. Which of the following is true regarding Sweet Husks?
A) To maximize expected profit, Sweet Husks should increase production.
B) To maximize expected profit, Sweet Husks should decrease production.
C) Sweet Husks is maximizing expected profit.
D) The expected profit from producing another ear of corn is negative.
Correct Answer:
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