Assume a perfectly competitive firm is producing 300 units of output, P = $10, ATC of the 300th unit is $11, marginal cost of the 300th unit = $10, and AVC of the 300th unit = $9. Based on this information, the firm is:
A) earning an economic profit of $300.
B) earning an economic profit of $600.
C) incurring a loss of $300 and should shut down.
D) incurring a loss of $300, but should continue to operate in the short run.
Correct Answer:
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