Suppose you are hired as an economic consultant for Promax Consulting Company. Your job is to advise the company’s clients on the appropriate action to take in the short-run in order to maximize the profits (or minimize the losses) for each firm. The firms you are about to analyze produce different products, and each operates independently in a different perfectly competitive market. You may assume that each is currently operating at an output level where marginal cost is increasing. Fill in the missing information, and make your suggestions about the appropriate action for each firm by placing one of the following symbols in the last row of the table of information that follows:
Suppose you are hired as an economic consultant for Promax Consulting Company. Your job is to advise the company’s clients on the appropriate action to take in the short-run in order to maximize the profits (or minimize the losses) for each firm. The firms you are about to analyze produce different products, and each operates independently in a different
C = currently operating at the correct level of output
I = increase the level of output
D = decrease the level of output
SD = shutdown the plant
Firm A B
OUTPUT _____ 300
TR $1800 $300
TC _____ $525
TFC $180 _____
TVC _____ _____
MC $3.50 $1.00
Suggestion _____ _____
Reason* _____ _____
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