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A perfectly competitive firm that makes car batteries has a fixed cost of $10,000 per mon

A perfectly competitive firm that makes car batteries has a fixed cost of $10,000 per mon

 A perfectly competitive firm that makes car batteries has a fixed cost of $10,000 per month. The market price at which it can sell its output is $100 per battery. The firm’s minimum AVC is $105 per battery. The firm is currently producing 500 batteries a month (the output level at which MR = MC). This firm is making a _____________ and should _______________ production.

a. profit; increase

b. profit; shut down

c. loss; increase

d. loss; shut down

Abhinav 05-Dec-2019

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