Asked by
Jonathon Greer
on Dec 11, 2024
Verified
Assume a certain competitive price-taker firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. To maximize its profit, the firm should
A) increase its output.
B) continue to produce 1,000 units.
C) decrease its output, but continue to produce.
D) shut down.
Competitive Price-Taker
An entity in a market that has no control over the prices at which its products are sold, typically due to intense competition and product uniformity.
Marginal Cost
The cost of producing one additional unit of a product.
Average Total Cost
The total cost of production divided by the quantity of output produced, representing the cost per unit of output.
- Scrutinize the relationship between a firm's production alterations and its profit margins in a context of market competition.
Verified Answer
AM
Learning Objectives
- Scrutinize the relationship between a firm's production alterations and its profit margins in a context of market competition.