Question
The firm of economic consultants 'Never Wrong Ltd.' seeks your advice on what would be a profit-maximizing strategy for a client. This client is a
The firm of economic consultants 'Never Wrong Ltd.' seeks your advice on what would be a profit-maximizing strategy for a client. This client is a firm that operates in a perfectly competitive market with U-shaped average variable cost and average total cost curves. Further information regarding the firm's costs and revenues, at its current level of output, is as follows:
| Price | 14 |
| MC | 12 |
| AVC | 8 |
| ATC | 9 |
| Increase in output - | |
| MC will | Stay the same |
| ATC will | Increase |
To maximize its profits the firm should:
Remain in operation and increase its output.
Remain in operation and keep its output constant.
Remain in operation and decrease its output.
Shut down operations in the short-run.
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Entrepreneurship
Authors: Andrew Zacharakis, William D Bygrave
5th Edition
9781119563099
