A firm sells a product in a perfectly competitive market. The marginal cost of the product at the current output level of 500 units is $1.50. The minimum possible average variable cost is $1. The market price of the product is $1.25. To maximize profits, the firm should
A. decrease production to less than 500 units.
B. increase production to more than 500 units.
C. continue producing 500 units.
D. shut down.
Answer: A
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