Consider a perfectly competitive firm in the following position: output = 4000 units,market price = $1,total fixed costs = $2000,total variable costs = $2000,and marginal cost = $1.To maximize profits the firm should

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The firm should not change its output because it is already producing at the quantity where marginal cost equals price, which is the profit-maximizing level of output for a perfectly competitive firm. If the firm were to reduce its output, it would forego potential revenue from selling additional units. If it were to expand its output, it would incur additional variable costs, which would reduce profits. Therefore, the best choice for the firm is to maintain its current output level.

Consider a Perfectly Competitive Firm in the Following Position: Output