A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 1000 units is $2.50. The minimum possible average variable cost is $2.00. The market price of the product is $2.50. To maximize profit or minimize losses, the firm should:

An example of tax smoothing is provided by evidence of

A) temporary changes in defense expenditures by the government. B) reductions in tax rates prior to presidential elections. C) Keynesian tax cuts designed to help the economy recover from a recession. D) reliance on debt financing rather than taxation during World War II.

Suppose a firm acts to minimize the cost of producing 500 units of output and determines this cost to be $25,000. Then, if the firm acts to maximize output for a total cost of $25,000, the maximum output attainable is

A) 500. B) less than 500. C) more than 500. D) unknown.