If a perfectly competitive firm produces an output level at which price is greater than marginal cost, then the firm should:
A)employ more fixed factors of production.
B)reduce output to earn greater profits or smaller losses.
C)expand output to earn greater profits or smaller losses.
D)leave its output decision unchanged because it is earning a profit.

Question

Quizplus · Accepted Answer

If the price is greater than marginal cost, the firm should increase output because the revenue generated from selling an additional unit is greater than the cost of producing an additional unit.

If a Perfectly Competitive Firm Produces an Output Level at Which