A perfectly competitive firm with lower marginal costs will produce ______ a competitor with higher marginal costs.
A) more units than
B) fewer units than
C) the same number of units as
D) higher quality units than

Question

Quizplus · Accepted Answer

A perfectly competitive firm will always aim to produce at the point where marginal cost equals marginal revenue. A firm with lower marginal costs will therefore have a lower cost of production per unit and will be able to sell at a lower price while still making a normal profit. This means they will be more competitive in the market and will be able to sell more units than a competitor with higher marginal costs.

A Perfectly Competitive Firm with Lower Marginal Costs Will Produce