Suppose that when a perfectly competitive firm produces 1,000 units of output, its total variable cost is $1,900. If the marginal cost of producing the 1,000th unit is $1.70, and if the market price of each unit of output is $1.70, then the firm should:
A. shut down.
B. increase output.
C. raise its price.
D. continue to produce 1000 units.
Answer: A
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A. True B. False C. Uncertain