If price is greater than marginal cost,a perfectly competitive firm should increase output because

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In a perfectly competitive market, firms maximize profits by producing at the quantity where marginal cost equals price. If the price is greater than marginal cost, then producing additional units will add to the firm's profits (or reduce losses), so the firm should increase output. Option A is incorrect because if marginal costs are increasing, then producing more units may actually decrease profits. Option C is also incorrect because the price may still be below the firm's average or total cost, which would not make it profitable to increase output.

If Price Is Greater Than Marginal Cost,a Perfectly Competitive Firm