A farmer currently produces 4,000kg of potatoes in a perfectly competitive market and observes that the market price is $7 /kg, his fixed costs are…
A farmer currently produces 4,000kg of potatoes in a perfectly competitive market and observes that the market price is $7 /kg, his fixed costs are $14,000, and the variable costs are $14,000. In the short run he should:
A) Reduce production if MC<$7
B) Keep producing 4,000kg if MC=$7
C) Reduce production if MC=$7
D) Shut down temporarily
E) Exit the industry
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