If a competitive firm can sell a bushel of soybeans for $25, has an average variable cost of $24 per bushel, and has a marginal cost of $26 per bushel, the profit-maximizing firm should

Question

Quizplus · Accepted Answer

Since the marginal cost ($26) is higher than the price ($25), the firm should reduce output to maximize profits. Increasing production would only increase losses because it costs more to produce each additional bushel than what it can be sold for.

If a Competitive Firm Can Sell a Bushel of Soybeans