20) Suppose a perfectly competitive firm is producing a level of output for which price equals average total cost, and average total cost is less than marginal cost. In order to maximize its profits, the firm should A) reduce its output. B) expand its output. C) shut down. D) increase the market price. E) not change its output.

word_media_image1.png

answer

watching

192

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Jamar FerryLv2

8 Sep 2018

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

28) Consider a perfectly competitive firm that is producing a level of output such that price equals average total cost and average total cost is less than marginal cost. In order to maximize its profits, the firm should A) reduce output. B) expand output. C) shut down D) increase the market price. E) not change output.

A perfectly competitive firm is currently producing 1,000 baseball hats Its current marginal cost is $5. average total cost is $6, and its total fixed costs are $900. The market price is $5. To maximize profits or minimize losses, this firm should A. decrease its output. B. stay at the current output level. C. raise its price, D. increase its output E. temporarily shut down production.

5. A perfectly competitive firm experiences the following at its current level of output: Industry price is $10; average total cost is $8; average fixed cost is $4 and marginal cost is $11. Under these conditions, in the short run, the firm should: expand output reduce output (but not to zero) * shut down remain at its existing output there is insufficient information to make a decision. e)