In a perfectly competitive industry the market price is $25. A firm is currently producing 10,000 units of output; average total cost is $28, marginal cost is $20, and average variable cost is $20. The firm should
A. produce less because the next unit of output decreased profit by $3.
B. raise price because the firm is losing money.
C. keep output the same because the firm is producing at minimum average variable cost.
D. shut down because the firm is losing money.
E. produce more because the next unit of output increases profit by $5.
Answer: E
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Fill in the blank(s) with the appropriate word(s)