Question 34
The information below applies to a competitive firm that sells its output for $44.00 per unit.
When the firm produces and sells 100 units of output, its average total cost is $24.50. When the firm produces and sells 101 units of output, its average total cost is $24.75
Suppose the firm is currently producing and selling 100 units of output. Should the firm increase its output to 101 units?
Yes. This is because the marginal revenue exceeds the marginal cost.
Yes. This is because the marginal revenue exceeds the average total cost.
No. This is because the marginal cost exceeds the marginal revenue.
No. This is because the average total cost exceeds the marginal revenue.
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