Answer (B) is correct . A firm should increase production until marginal revenue equals marginal cost. For a firm in pure competition, marginal revenue is the same as price ($190 in this case). At 6 units, marginal revenue equals marginal cost. Given that average total cost is also $190, the firm will break even.
Answer (A) is incorrect because The firm also will break even at 5?units.
Answer (C) is incorrect because The firm will incur a loss at 8?units. The average total cost will be greater than price (marginal revenue).
Answer (D) is incorrect because The firm will incur a loss at 8?units. The average total cost will be greater than price (marginal revenue).
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If the market price for Gator’s product is $190, this firm should produce