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Consider the Following Cost Curves for Two Perfectly Competitive Firms,A

Question 105

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Consider the following cost curves for two perfectly competitive firms,A and B. Consider the following cost curves for two perfectly competitive firms,A and B.   FIGURE 9-3 -Refer to Figure 9-3.If Firm B is producing at output level q<sub>2</sub>,and selling its output at p<sub>0</sub>,then Firm B should A) remain at this output level because profits are maximized when SRAVC is at its minimum. B) expand output to q<sub>1</sub> because profits are maximized when SRATC is at its minimum. C) shut down because at this price and output level the firm is suffering losses. D) expand output to q<sub>0</sub> so that profits will be maximized. FIGURE 9-3
-Refer to Figure 9-3.If Firm B is producing at output level q2,and selling its output at p0,then Firm B should


A) remain at this output level because profits are maximized when SRAVC is at its minimum.
B) expand output to q1 because profits are maximized when SRATC is at its minimum.
C) shut down because at this price and output level the firm is suffering losses.
D) expand output to q0 so that profits will be maximized.

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