The following in formation is available for a company that operates in a perfectly competitive market. Current output 5000 units Current market price $5 Total cost $25,000 Marginal cost $4 Total variable cost $20,000 What is the best action for this firm. a) Increase output in the short run and stay in the market the long run b) Increase output in the short run and decrease output in the long run c) Shutdown in the short run and exit in the long run d) shut down in the short run and produce in the long run. e) reduce output in the short run and increase output in the long run
The following in formation is available for a company that operates in a perfectly competitive market. Current output 5000 units Current market price $5 Total cost $25,000 Marginal cost $4 Total variable cost $20,000 What is the best action for this firm. a) Increase output in the short run and stay in the market the long run b) Increase output in the short run and decrease output in the long run c) Shutdown in the short run and exit in the long run d) shut down in the short run and produce in the long run. e) reduce output in the short run and increase output in the long run
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The following in formation is available for a company that operates in a
Current output | 5000 units |
Current market |
$5 |
Total cost | $25,000 |
Marginal cost | $4 |
Total variable cost | $20,000 |
What is the best action for this firm.
a) Increase output in the short run and stay in the market the long run
b) Increase output in the short run and decrease output in the long run
c) Shutdown in the short run and exit in the long run
d) shut down in the short run and produce in the long run.
e) reduce output in the short run and increase output in the long run
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