Technological innovations by Mario's Milk have allowed them to reduce the marginal cost of their milk while the market price for milk remains unchanged. Assume the market for milk is perfectly competitive. Which of the following statements are true: Mario should produce more milk, compared to before the technological innovations, to maximise his profit at the current market price. Mario should produce less milk than before the technological innovations because his profit margin has increased. Mario should produce less milk to avoid an increase in total costs. Mario should now produce to where price equals average variable cost.

Technological innovations by Mario's Milk have allowed them to reduce the marginal cost of their milk while the market price for milk remains unchanged. Assume the market for milk is perfectly competitive. Which of the following statements are true: Mario should produce more milk, compared to before the technological innovations, to maximise his profit at the current market price. Mario should produce less milk than before the technological innovations because his profit margin has increased. Mario should produce less milk to avoid an increase in total costs. Mario should now produce to where price equals average variable cost.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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