Scenario 14-1
Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit.
-Refer to Scenario 14-1. To maximize its profit, the firm should

Question

Quizplus · Accepted Answer

The firm should decrease its output because the marginal cost ($15) is greater than the price ($12), indicating that producing additional units decreases profit. However, since the price is above average total cost ($11), the firm should not shut down.

Scenario 14-1 Assume a Certain Firm in a Competitive Market Is Producing