A purely competitive firm is producing at the point where its marginal cost equals the price of its product.If the firm increases its output, then total revenue will
A)increase and profits will increase.
B)decrease and profits will increase.
C)increase and profits will decrease.
D)decrease and profits will decrease.

Question

Quizplus · Accepted Answer

In a purely competitive market, if a firm increases output beyond the point where marginal cost equals price, marginal cost will exceed marginal revenue, leading to increased total revenue but decreased profits due to higher costs.

A Purely Competitive Firm Is Producing at the Point Where