If a firm in a perfectly competitive market faces the curves in the graph shown and observes a market price of $16, the firm:
A. can make positive profits by producing less than 43 units.
B. cannot make positive profits and should shut down in the short run.
C. can make positive profits by producing where MC = MR.
D. should continue to operate in the short run, but plan to exit in the long run.
Answer: C
Economics
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