Answer:
A. Yes, it should continue to produce because the firm's revenues cover the total variable cost of $16,000.
Explanation:
A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. Market participants are price takers.
In the short run ,if price is less than average variable cost, the firm should shutdown.
Also, if total revenue is less than the total variable cost, the firm should shutdown into the short run.
Total revenue = $10 x 3000 = $30,000
Total cost = Fixed cost + variable cost
$36,000 = $20,000 + variable cost
Variable cost = $16,000
Total revenue is greater than total variable cost, so the firm should continue operations in the short run.
I hope my answer helps you
