Question

25. At the current level of output, a firm faces the following situation: AC > P= MR > MC > AVC. On the basis of this information, we can conclude that: (A) This is a monopoly firm that is currently producing too much output to maximize profit. If nothing changes, it should shut down in the long run. (B) This is a perfectly competitive firm that is currently producing too much output to maximize profit. If nothing changes, it should shut down in the long run. (C) This is a monopoly firm that is currently producing too little output to maximize profit. If nothing changes, it should shut down in the long run. (D) This is a perfectly competitive firm that is currently producing too little output to maximize profit. If nothing changes, it should shut down in the long run. (E) This is a monopoly firm that is producing the profit-maximizing output. It should continue to do what it is doing. (F) This is a perfectly competitive firm that is producing the profit-maximizing output. It should continue to do what it is doing. (G) This is a monopoly firm that is currently producing too much output to maximize profit. It should not necessarily shut down in the long run. (H) This is a perfectly competitive firm that is currently producing too much output to maximize profit. It should not necessarily shut down in the long run. (1) This is a monopoly firm that is currently producing too little output to maximize profit. It should not necessarily shut down in the long run. (J) This is a perfectly competitive firm that is currently producing too little output to maximize profit. It should not necessarily shut down in the long run.