Scenario 13-1
Assume a certain firm in a competitive market is producing Q = 1,000 units of output.At Q = 1,000,the firm's marginal cost equals $15 and its average total cost equals $11.The firm sells its output for $12 per unit.
-Refer to Scenario 13-1.To maximize its profit,the firm should

Question

Quizplus · Accepted Answer

The firm should decrease its output because the marginal cost ($15) is greater than the price ($12), indicating that producing additional units is not profitable. However, since the price is above the average total cost ($11), the firm should continue to produce to cover its costs.

Scenario 13-1 Assume a Certain Firm in a Competitive Market Is Producing