Which Production Decision Is a Profit-Maximizing Firm in a Competitive

Multiple Choice

Which production decision is a profit-maximizing firm in a competitive market most likely to take when price falls below the minimum of average variable cost

A) The firm will continue to produce to attempt to pay fixed costs.
B) The firm will immediately stop production to minimize its losses.
C) The firm will stop production as soon as it is able to pay its sunk costs.
D) The firm will continue to produce in the short run but will likely exit the market in the long run.