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A Perfectly Competitive Firm Has an 80 Percent Probability of a High

Question 93

Multiple Choice

A perfectly competitive firm has an 80 percent probability of a high demand of $10 and a 20 percent chance of a low demand of $8. To maximize expected profit, the firm should produce the quantity that sets the marginal cost equal to_______ .


A) $9.20
B) $8.00
C) $10.00
D) $9.60

Correct Answer:

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