Onsider a firm that operates in a perfectly competitive market. currently the firm is producing 300 units of output and the price is $20. if marginal cost at 300 units is $22, the firm a. could increase profits by reducing output from 300 units. b. could increase profits by increasing output from 300 units. c. should decide to increase the price above $20. d. should shut down, since it must be losing money.

The best option is (d). should shut down, since it must be losing money

Explanation:

Step 1: Calculate the total revenue from sales

Total revenue from sales=price per unit×number of units

where;

price per unit=$20

number of units=300

replacing;

Total revenue=(20×300)=$6,000

Step 2: Total cost from marginal cost

The marginal cost is the change in total production cost caused by increasing a unit in production.

Total marginal cost=(20×300)+(22×1)=$6,022

Step 3: net profit

net profit=total revenue-total marginal cost

where;

total revenue=$6,000

total marginal cost=$6,022

replacing;

profit=(6,000-6,022)=-$22

This means production of additional units increases the production cost and thus reducing the profits too.

b. a single paragraph.

a paragraph is a series of sentences that are organized and make sense, and are all related to a single topic . almost every piece of writing you do that is longer than a few sentences should be organized into paragraphs. this is because paragraphs show a reader where the subdivisions of an essay begin and end, and thus the reader see the organization of the essay into subjects in order to be able to understand its main points.