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Decsion making with respect to Market price

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Refer to the attachment for a perfectly competitive firm. If the market price is $23:

a) the firm should produce 40 units

b) the firm will have above normal profits

c) economic profits are greater than zero

d) all of the above

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Solution Summary

This explains the critieria of determining the market price under perfect competition.

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If the market price is $23:

d) all of the above

This is because the Firm's output is 40 units at$23. Also it will have economic profits greater than zero because Market price is more than the Average total cost. Thus it will have above normal ...

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