Suppose that in a perfectly competitive industry, the market price of the product is $12. Firm A is producing the output level at which average total cost equals marginal cost, both of which are $10. To maximize its profits, Firm A should

Question

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Since the market price ($12) is higher than the average total cost and marginal cost ($10), Firm A can increase its profits by expanding its output until marginal cost equals the market price.

Suppose That in a Perfectly Competitive Industry, the Market Price