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When the Marginal Cost of a Price-Taking Firm Is Less

Question 54

Multiple Choice

When the marginal cost of a price-taking firm is less than the market price of its product,the firm should:


A) expand output (provided that price is not less than average variable cost) .
B) reduce output (provided that price is not less than average variable cost) .
C) maintain output (provided that price is not less than average variable cost) .
D) charge more than the market price.

Correct Answer:

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