A Pet shop operates in a perfectly competitive industry. The firm is currently producing at a point where market
price equals its marginal cost. The Pet Shop’s total revenue is currently below total variable cost. You should advise this firm to
Select one:
a. Raise its price until it breaks even.
b. Produce in the short run to minimize its loss, but exit the industry in the long run.
c. Cease production immediately since it is incurring a loss and does not cover daily costs.
d. Lower its price so that it can sell more units of output.
Which one is this?
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