If a firm is a price taker and wants to earn as much profit as possible, it should expand output
A) to the quantity at which marginal cost is minimized.
B) as long as marginal cost is less than price.
C) to the quantity at which average total costs are minimized.
D) to try to sell all the output it can produce so that its average fixed costs will be minimized.

Question

Quizplus · Accepted Answer

A price-taking firm maximizes profit by producing up to the point where marginal cost equals the market price, as long as marginal cost is less than price.

If a Firm Is a Price Taker and Wants to Earn