Final answer:
FTC should consider the probability of a shortage, probability of a loss, and profit standard deviation, along with mean profit, when determining production quantity. Factors such as costs of production, market prices, and competition are important as well. Calculating profits and understanding the average cost curve aid in making these decisions.
"the correct option is approximately option D"
Step-by-step explanation:
In addition to mean profit, other factors that FTC should consider in determining production quantity include the probability of a shortage, the probability of a loss, and profit standard deviation. The stock market and gut feeling, while they can influence business decisions, are not typically considered expert-driven methods for determining production quantities.
The costs of production, the prices of related goods in production, sellers' expectations, and the number of sellers in the market can all influence the right production quantity.
Calculating profits by comparing total revenue and total cost is crucial, as is understanding the average cost curve to identify profits and losses. The concept of the shutdown point helps to determine the price at which a firm should continue producing in the short run. If the price falls below average variable costs, the firm should consider shutting down temporarily.
Average profit, obtained by dividing profit by the quantity of output produced, provides the firm's profit margin. This measure helps in understanding whether a firm can earn profits given the current market price.