If ATC = $20, AVC = $15, AFC = $5, MC = $15 and MR = $15, then a perfectly competitive firm should:
A) decrease output because MR AFC.
B) increase output because ATC MR.
C) shut down if the price will be below AVC.
D) maximize its profit because MR = MC.

Question

If ATC = $20, AVC = $15, AFC = $5, MC = $15 and MR = $15, then a perfectly competitive firm should:
A) decrease output because MR> AFC.
B) increase output because ATC > MR.
C) shut down if the price will be below AVC.
D) maximize its profit because MR = MC.

Quizplus · Accepted Answer

The Answer of If ATC = $20, AVC = $15, AFC = $5, MC = $15 and MR = $15, then a perfectly competitive firm should:
A) decrease output because MR> AFC.
B) increase output because ATC > MR.
C) shut down if the price will be below AVC.
D) maximize its profit because MR = MC.