HELP!! T-Shirt Enterprises is selling in a purely competitive market. Its output is 300 units, which...
HELP!!
T-Shirt Enterprises is selling in a purely competitive market. Its output is 300 units, which sell for $10 each. At this level of output, marginal cost is $1 and average variable cost is $1.50. The firm should: a. continue to produce 300 units. b. increase output. c. produce zero units of output. d. decrease output.
Homework Answers
b. increase output
Explanation: A purely competitive firm maximizes profit when its marginal revenue is equal to the marginal cost. Here, marginal revenue = price = $10.
Marginal cost = $1
So, the firm should increase production to increase profit.
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HELP!!
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