A perfectly competitive firm currently sells each unit of output at $3 and faces an average total cost of $5 at optimal output. What should the firm do? 1) Exit the industry as it is making a loss. 2) Continue to produce at the current output. 3) Continue to produce but reduce output. 4) Not possible to tell.
A perfectly competitive firm currently sells each unit of output at $3 and faces an average total cost of $5 at optimal output. What should the firm do? 1) Exit the industry as it is making a loss. 2) Continue to produce at the current output. 3) Continue to produce but reduce output. 4) Not possible to tell.
Chapter7: Perefect Competition
Section: Chapter Questions
Problem 10SQP
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1) Exit the industry as it is making a loss.
2) Continue to produce at the current output.
3) Continue to produce but reduce output.
4) Not possible to tell.
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