Suppose that marginal revenue for a perfectly competitive firm is $20. When the firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its average variable cost is $17. Then to maximize its profit in the short run, the firm A) should stay open and incur an economic loss of $20. B) must decrease its output to increase its profit. C) must increase its output to increase its profit. should not change its production because it is already maximizing its profit O D) and is making an economic profit. E) should shut down.
Suppose that marginal revenue for a perfectly competitive firm is $20. When the firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its average variable cost is $17. Then to maximize its profit in the short run, the firm A) should stay open and incur an economic loss of $20. B) must decrease its output to increase its profit. C) must increase its output to increase its profit. should not change its production because it is already maximizing its profit O D) and is making an economic profit. E) should shut down.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Firms In Competitive Markets
Section: Chapter Questions
Problem 4CQQ
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Question
![Suppose that marginal revenue for a perfectly competitive firm is $20. When the
firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its
average variable cost is $17. Then to maximize its profit in the short run, the firm
A) should stay open and incur an economic loss of $20.
B) must decrease its output to increase its profit.
C) must increase its output to increase its profit.
O D) should not change its production because it is already maximizing its profit
and is making an economic profit.
E) should shut down.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5d7c6df9-9072-40bc-ad85-7ace55fd8504%2Feea3d320-0204-49bf-8181-f79b8b2290ad%2F62lie2n_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose that marginal revenue for a perfectly competitive firm is $20. When the
firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its
average variable cost is $17. Then to maximize its profit in the short run, the firm
A) should stay open and incur an economic loss of $20.
B) must decrease its output to increase its profit.
C) must increase its output to increase its profit.
O D) should not change its production because it is already maximizing its profit
and is making an economic profit.
E) should shut down.
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