Question 4

In a competitive market, the market-determined price is $25. A firm in this market is producing 10,000 units of output, and, at this output level, the firm's average total cost reaches its minimum value of $25. What should the firm do?

Group of answer choices

Increase output because long-run marginal cost is above the average variable cost

Reduce output because average total cost is above the price

Reduce output because average total cost is above the average variable cost

Maintain current output because price is equal to long-run marginal cost

Maintain current output because price is equal to average variable cost

Increase output because the price is above average variable cost