If a firm in a perfectly competitive market is producing at a level of output where marginal costs exceed marginal revenue, the firm's profits:

Question

Quizplus · Accepted Answer

When marginal costs exceed marginal revenue, reducing output will decrease costs more than revenue, thus potentially increasing profits. This is because in the region where MC > MR, each additional unit produced adds more to cost than to revenue, making it inefficient.

If a Firm in a Perfectly Competitive Market Is Producing