A Firm Sells a Product in a Purely Competitive Market

Multiple Choice

A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 1,000 units is $2.5. The minimum possible average variable cost is $2. The market price of the product is $2.5. To maximize profits or minimize losses, the firm should

A) continue producing 1,000 units.
B) continue production, but reduce output.
C) increase production.
D) shut down.