When the marginal cost of a price-taker firm is more than the market price of its product, the firm should
A) expand output.
B) reduce output.
C) maintain output.
D) charge more than the market price.

Question

Quizplus · Accepted Answer

When marginal cost exceeds market price, the firm incurs a loss on additional units produced, so it should reduce output to maximize profit or minimize loss.

When the Marginal Cost of a Price-Taker Firm Is More