0 out of 1 points A perfectly competitive firm can produce t

0 out of 1 points A perfectly competitive firm can produce ts curret level of utut at an avernge sotal cost f S10 and a marginal cos of s If the market prie of he product is currently $8, what should the firm do? Selected Answer: c. The firm should increase production in order to increase protit. Answers a The fim should definitely shut down since average total cos b. The firm should continue to produce, but they should decrease production in order to increase profit c. The firm should increase production in order to increase profit d. The answer depends upon the relationship between price and average variable cost. The firm should shut down if average variable cost is $8 or greater, but the firm should continue to produce the current level of output if average variable cost is less than S8

Solution

Solution-

The correct option is D. The answer depends upon the relationship between price and average variable cost. The firm should shut down if average variable cost is $8 or greater, but the firm should continue to produce the current level of output if average variable cost is less than $8.

Reason-

A perfectly competitive firm, which produces an output, which understands the marginal revenue, which is the same price, and the marginal cost, as long as the average variable price is more than that.A perfectly competitive firm\'s short-run supply curve is the segment of our basic cost curve, which is superior to the average variable cost curve.