Assume a perfectly competitive firm sells its output for $150 per unit.It currently produces 6,000 units of output,at which output level it minimizes its average variable cost at $152 per unit.Assuming it wants to maximize its profits,it should:

Question

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The firm should shut down because the price per unit ($150) is less than the average variable cost ($152), meaning it cannot cover its variable costs and is incurring a loss on each unit produced.

Assume a Perfectly Competitive Firm Sells Its Output for $150