If a competitive firm can sell steel for $500 per ton, has an average variable cost of $400 per ton, and a marginal cost of $600 for the last ton produced, the profit-maximizing firm should

Question

Quizplus · Accepted Answer

Since the marginal cost ($600) of producing the last ton is higher than the price ($500) at which it can be sold, the firm should reduce output to decrease costs and increase profits.

If a Competitive Firm Can Sell Steel for $500 Per