A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 1,000 units is $2.50. The minimum possible average variable cost is $2.00. The market price of the product is $2.50. To maximize profits or minimize losses, the firm should Multiple Choice continue production, but produce less than 1,000 units. increase production to more than 1,000 units. continue producing 1,000 units. shut down.

Question

Business

Madalyn Armstrong

6 February, 19:01

A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 1,000 units is $2.50. The minimum possible average variable cost is $2.00. The market price of the product is $2.50. To maximize profits or minimize losses, the firm should Multiple Choice continue production, but produce less than 1,000 units. increase production to more than 1,000 units. continue producing 1,000 units. shut down.

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Answers (1)

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Raymond Little · Answer 1

Continue producing 1,000 units

Explanation:

Base on the scenario been described in the question, The marginal cost of the product at the current output of 1,000 units is $2.50. The market price of the product is $2.50. To maximize profits or minimize losses, what the firms need to do is continue producing 1,000 units