Answer to Question #26239 in Microeconomics for sarah

Question

Doggy Treats is selling dog treats in a purely competitive market. Its output is 800 treats, which it sells for $10 a treat. At the 800-treat level of output, the marginal cost is $11, the average total cost is $9.00, and the average variable cost is $8.00. Should the firm increase output, decrease output, or not produce? Why? How should the firm determine that optimal level of output?