In a perfectly competitive industry, the market price is $25. A firm is currently producing 10,000 units of output, its average total cost is $28, its marginal cost is $20, and its average variable cost is $20. Given these facts, explain whether the following statements are true or false, and why.

Question

In a perfectly competitive industry, the market price is $25.  A firm is currently producing 10,000 units of output, its average total cost is $28, its marginal cost is $20, and its average variable cost is $20.  Given these facts, explain whether the following statements are true or false, and why.

a. The firm is currently producing at the minimum average variable cost.

b. The firm should produce more output to maximize profit.
c. Average total cost will be less than $28 at the level of output that maximizes the firm’s

economyst · Answer

take a shot, what do you think. Hint: true, true, true