Suppose Robin's Clock Works produces in a perfectly competitive market. Suppose the average total cost of clocks is $95, the average variable cost of clocks is $90, and the price of clocks is $85. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm: A) can increase profit by increasing output. B) is earning a positive economic profit. C) should continue to produce since total revenue exceeds total variable cost. D) should shut down.
Suppose Robin's Clock Works produces in a perfectly competitive market. Suppose the average total cost of clocks is $95, the average variable cost of clocks is $90, and the price of clocks is $85. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm: A) can increase profit by increasing output. B) is earning a positive economic profit. C) should continue to produce since total revenue exceeds total variable cost. D) should shut down.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose Robin's Clock Works produces in a
A) can increase profit by increasing output.
B) is earning a positive economic profit.
C) should continue to produce since total revenue exceeds total variable cost.
D) should shut down.
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