Claude's Copper Clappers sells clappers for $40 each in a perfectly competitive market.At its present level of output,Claude's marginal cost is $39,average variable cost is $45,and average total cost is $60.To improve his profit or loss situation,Claude should _____

Question

Quizplus · Accepted Answer

Claude is currently selling his product at a price lower than his average total cost, which means he is incurring a loss. In such a situation, he should shut down in the short run to minimize his losses, since his revenue is not sufficient to cover his variable costs, let alone his fixed costs.

Claude's Copper Clappers Sells Clappers for $40 Each in a Perfectly