At the current level of output,the following data exists:
Price = $20
Marginal cost = $6
Average variable cost = $10
Average total cost = $13
What must be true at this level of output?
A) The firm should lower the price.
B) The firm should stay at the same level of output.
C) The firm should shut down.
D) The firm should increase output.
E) The firm should decrease output.

Question

Quizplus · Accepted Answer

The firm should increase output because the price ($20) is greater than the marginal cost ($6), indicating that producing more will increase profit.

At the Current Level of Output,the Following Data Exists