Author Question: Assume Cathy's Cupcake Company operates in a perfectly competitive market producing 10,000 cupcakes ... (Read 88 times)

acc299 · **on:** Apr 19, 2019

Question 1

Assume Cathy's Cupcake Company operates in a perfectly competitive market producing 10,000 cupcakes per day. At this output level, price exceeds the firm's marginal and average variable costs. It follows that producing one more cupcake will cause this firm's

◦ total cost to decrease.
◦ profits to increase.
◦ profits to decrease.
◦ profits to remain unchanged.

Question 2

Assume Cathy's Cupcake Company operates in a perfectly competitive market producing 10,000 cupcakes per day. At this output level, price exceeds this firmʹs marginal and average variable costs. To maximize profits, Cathy's should

◦ make no adjustments as they are already maximizing their profits.
◦ increase their output.
◦ decrease their output.
◦ stop producing since it is earning a loss.

jaaaaaaa · **Reply #1 on:** Apr 19, 2019

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