A perfectly competitive firm should continue to expand output whenever

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms should continue to expand output as long as the price they receive for their goods is greater than the marginal cost of producing an additional unit. This is because each additional unit sold at a price above the marginal cost adds to the firm's profit. Therefore, the correct answer is B, as P > MC is the condition that ensures the firm will earn a profit by producing additional output.

A Perfectly Competitive Firm Should Continue to Expand Output Whenever