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Economics Multiple Choice; Compute output; increase profit; marginal revenue
T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2 each. At this level of output, the average total cost is $2.50 and the average variable cost is $2.20. Based on these data, the firm shouldshut down in the short run.decrease output to 2,500 units.continue to produce 3,000 units.increase output to 3,500 units.
If a purely competitive firm is producing at an output where marginal revenue exceeds marginal cost, the firm will increase its profit byreducing production to the point where variable costs are minimized.reducing production to the point where unit costs are minimized.reducing its output and simultaneously increasing its price.increasing its output.
In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that isequal to the price.less than the price.greater than the price.equal to the average cost.
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