Peter's Pencils is a perfectly competitive company producing pencils. Suppose Peter is producing 1,000 pencils an hour. If the total cost of 1,000 pencils is $500, the market price per pencil is $2, and the marginal cost is $2, then Peter
A) makes an economic profit because marginal revenue is equal to marginal cost at this output level.
B) should decrease his output to increase his profit.
C) is maximizing his profit and is making an economic profit.
D) should increase his output to increase his profit.
E) is not maximizing his profit but is making zero economic profit anyway.
C
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