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A firm is producing such that MR<MC so they should release less output. The current market...

A firm is producing such that MR<MC so they should release less output. The current market price is $12 and they should release a quantity of 3 to market.

It is a perfectly competitive market and the total cost function is TC(q) = 36 + 2q^2.

1. This firm is losing money by releasing output onto market. Should the firm have chosen to release zero output (i.e. shut down)?

A. Yes
B. No

2. If the fixed cost to the firm increases, it will reduce their output decision.

A. True
B. False
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