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A perfectly competitive firm is producing at the profit-maximizing output level and it finds that its AVC is $4.35, its ATCis $4.50, and its price
A perfectly competitive firm is producing at the profit-maximizing output level and it finds that its AVC is $4.35, its ATCis $4.50, and its price is $4.45 at that output level. Which of the following is true?
A.The firm should shut down because P B.It would be less expensive for the firm to operate in the short run than to shut down becauseP > AVC C.The firm should shut down because it is operating at a loss. D.The firm is making a profit of $0.10 per unit. E.There is not enough information to answer this question.
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