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If the price is greater than average total cost at the profit-maximizing quantity of output in the short run,a perfectly competitive firm will:
A) continue to produce at a loss.
B) produce at a profit.
C) shut down production.
D) reduce its fixed costs.
Average Total Cost
The overall expense of manufacturing divided by the quantity of products made, indicating the expense for each unit of production.
Profit-maximizing
The process of adjusting production and pricing strategies to achieve the highest possible profit from the sale of goods and services.
Short Run
A time period in economics during which at least one input is fixed and cannot be changed.
- Comprehend the interplay between price, average total cost, and the maximization of profits within a perfectly competitive market environment.
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Learning Objectives
- Comprehend the interplay between price, average total cost, and the maximization of profits within a perfectly competitive market environment.
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