T-Shirt Enterprises is operating in a perfectly competitive market. It is producing 3,000 t-shirts and selling them for $10 each. At this level of output, the average total cost is $10.50 and the average variable cost is $10.20. Based on these data, the firm should
A. decrease production to 2,500 t-shirts.
B. shut down in the short run.
C. continue to produce 3,000 t-shirts.
D. increase production to 3,500 t-shirts.
Answer: B
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