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Joe's Garage Operates in a Perfectly Competitive Market

Question 173

Multiple Choice

Joe's Garage operates in a perfectly competitive market.At the point where marginal cost equals marginal revenue,ATC = $20,AVC = $15,and the price per unit is $10.In this situation,


A) Joe's Garage is earning a positive economic profit.
B) Joe's Garage should shut down immediately.
C) Joe's is losing money in the short run, but should continue to operate.
D) the market price will rise in the short run to increase profits.

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