For a monopoly firm, if AVC = $35, P = $36, and ATC = $40, then the firm should:

1. A.reduce production.
2. B.produce at the point where MC = MR.
3. C.shut down.
4. D.None of the above
5. E.increase production.

Perfectly competitive firms and monopoly firms should increase production when:

A.marginal revenue is greater than marginal cost.

B.price is equal to marginal cost.

C.marginal revenue is less than marginal cost.

D.price is less than marginal cost.

Suppose a firm produces 20 units of output. At that level of output, ATC = 35,P= 50, MR and MC = 30. The firm's economic profit is:

1. A.$700.
2. B.$600.
3. C.$1,000.
4. D.$300.