Suppose hammers are produced in a perfectly competitive market. Ace Manufacturing is currently producing 1,000 hammers. It estimates that the marginal revenue of selling another hammer is $15, the marginal cost is $17, and the average total cost is $13. Fromthese figures, an economic consultant would conclude that Ace
A) is making an economic profit of $2,000
B) is maximizing total profit
C) should produce more output
D) should raise the price of a hammer
E) will soon go out of business

Question

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The Answer of Suppose hammers are produced in a perfectly competitive market. Ace Manufacturing is currently producing 1,000 hammers. It estimates that the marginal revenue of selling another hammer is $15, the marginal cost is $17, and the average total cost is $13. Fromthese figures, an economic consultant would conclude that Ace
A) is making an economic profit of $2,000
B) is maximizing total profit
C) should produce more output
D) should raise the price of a hammer
E) will soon go out of business

Suppose Hammers Are Produced in a Perfectly Competitive Market