UG Tech,Inc

UG Tech,Inc.is a perfectly competitive firm producing wireless earbuds where marginal revenue is equal to marginal cost.The current market price of wireless earbuds is $30.00.UG Tech,Inc.sells 500 wireless earbuds.Its short-run average variable cost is $10.00 and its average fixed cost is $5.00.What should UG Tech,Inc.do?

A) Continue to produce because price exceeds short-run average variable cost.
B) Shut down and produce zero earbuds because price is less than short-run average variable cost.
C) Decrease production so that short-run average variable cost will decrease.
D) Increase production so that average fixed cost will decrease.

Correct Answer:

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