Question
In a perfectly competitive industry, the market price is $25. A firm is currently producing 10,000 units of output, its average total cost is $28,
In a perfectly competitive industry, the market price is $25. A firm is currently producing 10,000 units of output, its average total cost is $28, its marginal cost is $20, and its average variable cost is $20.
What can be said about the firm's average total cost and its marginal cost at the level of output that maximizes its profit?
A. At the profit maximizing level of output, the firm's average total cost will be less than its marginal cost.
B. At the profit maximizing level of output, the firm's average total cost will be equal to its marginal cost.
C. At the profit maximizing level of output, the firm's average total cost will be greater than its marginal cost.
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