Suppose a perfectly competitive firm can increase its profits by increasing its output. Then it must be true that the firm's:
A) marginal revenue is less than its marginal cost.
B) price exceeds its marginal revenue.
C) price exceeds its marginal cost.
D) marginal cost exceeds its marginal revenue.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm can increase its profits by producing more output as long as the price (which equals marginal revenue in perfect competition) exceeds its marginal cost.

Suppose a Perfectly Competitive Firm Can Increase Its Profits by Increasing