If a perfectly competitive firm is producing a rate of output at which MC exceeds price,then the firm
A)Must have an economic loss.
B)Can increase its profit by increasing output.
C)Can increase its profit by decreasing output.
D)Is maximizing profit.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, if the marginal cost (MC) of producing an additional unit is higher than the price at which it can be sold, the firm can increase its profit by reducing output. This is because producing that additional unit costs more than the revenue it generates, leading to a decrease in overall profit.

If a Perfectly Competitive Firm Is Producing a Rate of Output