If a competitive firm can sell a ton of steel for $500 a ton and it has an average variable cost of $400 a ton, and the marginal cost is $600 a ton, the firm should:

Question

Tara Ross

Business

30 August, 08:00

If a competitive firm can sell a ton of steel for $500 a ton and it has an average variable cost of $400 a ton, and the marginal cost is $600 a ton, the firm should:

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Cindy Sandoval · Answer 1

If a competitive firm can sell a ton of steel for $500 a ton and it has an average variable cost of $400 a ton, and the marginal cost is $600 a ton, the firm should reduce its output. The reason for the reduction of output is the marginal cost it will have. The marginal cost exceeds the selling price of the product which is a bad sign for the company.