ECON 102 Study Guide - Quiz Guide: Average Variable Cost, Perfect Competition, Marginal Cost

• School: University of Illinois
• Department: Economics
• Course: ECON 102
• Professor: All

Document Summary

In the long run, all of the firms in a perfectly competitive industry will: The correct answer is: produce at an output level at which average total cost equals marginal cost. If the price is consistently below the average variable cost, then in the short run a perfectly competitive firm should: Select one: raise price, sell more output, shut down, lower price to sell more. A firm operates in a perfectly competitive industry. At the current level of output, the marginal cost is and the average cost is . If the firm can sell its product for , Select one: the firm is maximizing its profits at the current level of output, the firm"s average total cost is falling, the firm should decrease its output, the firm should produce more units. The correct answer is: the firm should decrease its output.