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 800 units is $3.50. The minimum possible average variable cost is $2.00. The market price of the product is $4.00. To maximize profits or minimize losses, the firm should

A) continue producing 800 units.
B) continue production, but reduce output.
C) increase production.
D) shut down.