Suppose a firm in a competitive market notices that its marginal cost is greater than its price.This means that:

Question

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If a firm's marginal cost is greater than its price, each additional unit of production will actually result in a loss. Therefore, reducing production would enable the firm to minimize its losses or potentially increase profits. Increasing production (choice A) would only result in greater losses, as would increasing marketing expenditures (choice D). The fact that marginal cost is greater than price does not necessarily mean that the marginal cost is falling (choice C).

Suppose a Firm in a Competitive Market Notices That Its