At its present rate of output, Barrel O' Biscuits, a perfectly competitive firm, finds that its marginal cost exceeds its marginal revenue and price exceeds average variable cost.To maximize profit, the firm should

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When marginal cost exceeds marginal revenue, the firm is overproducing and not maximizing its profit. Similarly, when price exceeds average variable cost, the firm is covering its variable costs but not generating enough revenue to cover its fixed costs and earn a profit. Therefore, the firm should reduce its output to the point where marginal cost equals marginal revenue, which is also the point where the profit is maximized.

At Its Present Rate of Output, Barrel O' Biscuits, a Perfectly