Calini's Sells Empanadas in a Perfectly Competitive Market

Calini's sells empanadas in a perfectly competitive market. Calini's is currently producing 500 empanadas, and the marginal cost of the 500th empanada produced is $2.95. If the market price of an empanadas is $4, which of the following statements is true?

A) Calini's should increase the quantity of empanadas that it produces.
B) Calini's should decrease the quantity of empanadas that it produces.
C) Calini's should charge a price of $2.95.
D) Calini's should continue to produce 500 empanadas.

Correct Answer:

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