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Assume a Perfectly Competitive Firm Sells Its Output for $150

Question 87

Multiple Choice

Assume a perfectly competitive firm sells its output for $150 per unit.At its current 2,000 units of output, marginal cost is $140 and increasing, and average variable cost is $143.Assuming it wants to maximize its profits, it should:


A) increase output.
B) decrease output, but not shut down.
C) maintain its current output rate.
D) shut down.
E) There is not enough information to determine what the firm should do.

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