A firm sells a product in a purely competitive market. The marginal cost of the product at the current output is $4.00 and the market price is $4.50. What should the firm do?
A. Decrease output if the minimum possible average variable cost is $3.00.
B. Decrease output if the minimum possible average variable cost is $3.75.
C. Shut down if the minimum possible average variable cost is $3.00.
D. Increase output if the minimum possible average variable cost is $3.75.
Answer: D
You might also like to view...
What is a market economy?
What will be an ideal response?
Refer to Figure 24-3. Which of the points in the above graph are possible short-run equilibria?
A) A and B B) A and C C) A and D D) A, B, C, and D
Land sale booms were caused by large waves of immigration
Indicate whether the statement is true or false
The supply curve for a monopolist, in the short run, is defined in the same way as that for a competitive firm: it is the portion of the marginal cost curve above average variable cost
a. True b. False Indicate whether the statement is true or false