Cost structure of perfectly competitive firm

Reference no: EM1369871

In the perfectly competitive industry, the market price is $25. A firm is currently producing 10,000 units of output, its average total cost is $28, its marginal cost is $20, and its average variable cost is $20. Given these facts, describe whether the following statements are true or false:

a. The firm is currently producing at the minimum average variable cost.

b. The firm should produce more output to maximize its profit.

c. Average total cost will be less than $28 at the level of output that maximizes the firm's profit.

Reference no: EM1369871

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