If a perfectly competitive firm can sell a bushel of soybeans for $25 per bushel, has an average variable cost of $20 per bushel, and the marginal cost is $22 per bushel, the profit-maximizing firm should

Question

Quizplus · Accepted Answer

Since the price ($25) is higher than the marginal cost ($22), the firm should expand output to increase profit. In perfect competition, firms cannot set prices, so increasing price is not an option.

If a Perfectly Competitive Firm Can Sell a Bushel of Soybeans