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If a Profit-Maximizing Firm Finds That Price Exceeds Average Variable

Question 48

Multiple Choice

If a profit-maximizing firm finds that price exceeds average variable cost and marginal revenue is greater than marginal cost, what action should it take?


A) not alter its production level, since it is earning a profit
B) reduce output, but continue producing in the short run
C) shut down
D) increase output

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