Karlos Sells His Product for $40 Each in a Competitive

Multiple Choice

Karlos sells his product for $40 each in a competitive price-taker market. At his present rate of output, his marginal cost is $39, average variable cost is $25, and average total cost is $45. To improve his profit/loss situation, Karlos should

A) increase output
B) reduce output but not to zero
C) maintain the present rate of output
D) shut down
E) raise the price