If a perfectly competitive firm chooses output such that the marginal cost is lower than the market price, the firm will:
A)not be maximizing profits.
B)shut down.
C)not be making a profit.
D)not be covering average variable costs.

Question

Quizplus · Accepted Answer

If the marginal cost is lower than the market price, the firm could increase profits by producing more. Therefore, the firm is not maximizing profits at its current output level.

If a Perfectly Competitive Firm Chooses Output Such That the Marginal