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 $25,and average total cost is $45.To improve his profit or loss situation,Claude should _____

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Since the price ($40) is greater than the marginal cost ($39), increasing output will increase profit because each additional unit sold adds more to revenue than it does to costs. Additionally, the price is above the average variable cost ($25), meaning Claude is covering his variable costs and contributing to fixed costs, so he should not shut down. Raising the price is not an option in a perfectly competitive market where sellers are price takers.

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