Consider a firm operating in a perfectly competitive market. At its current output of 200 units, marginal revenue is $25 . At this output, average total cost is decreasing and equals $22 . Given this information, what should the firm do?
a. Continue to produce 200 units, because this maximizes profits
b. Increase output beyond 200 units, since a higher output will yield the profit maximizing output level.
c. Decrease output below 200 units, since a lower output will result in the profit maximizing output level.
d. More information is needed to determine the firm's next step.
b
Economics
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