A perfectly competitive firm is currently producing at a point where price is $10 and both marginal cost and average variable cost are $7. To maximize profit or minimize loss in the short run, this firm should:
a. ?shut down.
b. ?increase its output.
c. ?raise its price.
d. ?reduce its output.
e. ?lower its price.
Answer: b. ?increase its output.
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What will be an ideal response?
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A) asset-price inflation B) product-price inflation C) both asset-price and product-price inflation D) demand-induced-one-shot inflation E) supply-induced one-shot inflation
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