What is the value of the spending multiplier when MPC = 0.85 and MPI = 0.3?

A firm in perfect competition is a price taker because

A) there are no good substitutes for its good. B) many other firms produce identical products. C) it is very large. D) its demand curves are downward sloping. E) its demand curve is vertical at the profit-maximizing quantity.

Claude's Copper Clappers sells clappers for $40 each in a perfectly competitive market. At its present rate of output, Claude's marginal cost is $39, average variable cost is $25, and average total cost is $45 . To improve his profit/loss situation, Claude should

a. increase output b. reduce output but not to zero c. maintain the present rate of output d. shut down e. raise the price