Assume Robbie's Robots operates in a perfectly competitive market producing 3,000 robots per day. At this output level, the selling price is $800 per robot and the marginal cost is $625 per robot. It follows that producing one more robot will cause this firm's
A) total cost to decrease.
B) profits to increase.
C) profits to decrease.
D) profits to remain unchanged.

Question

Quizplus · Accepted Answer

Since the marginal cost ($625) of producing one more robot is less than the selling price ($800) per robot, producing an additional robot will increase the firm's profits.

Assume Robbie's Robots Operates in a Perfectly Competitive Market Producing