Claude's Copper Clappers sells clappers for $60 each in a perfectly competitive market.At its present level of output,Claude's marginal cost is $65,average variable cost is $25,and average total cost is $62.To improve his profit or loss situation,Claude should _____

Question

Quizplus · Accepted Answer

Since the price ($60) is below the marginal cost ($65) but above the average variable cost ($25), Claude should reduce output to the point where the price equals the marginal cost to minimize losses. Shutting down is not optimal because the price exceeds the average variable cost, indicating Claude can cover variable costs and contribute to fixed costs.

Claude's Copper Clappers Sells Clappers for $60 Each in a Perfectly