A perfectly competitive firm's marginal cost of producing a good is $12, while its price for the good is $15. Therefore, it should produce more output.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, if the price of the good ($15) is higher than the marginal cost of production ($12), the firm can increase its profit by producing more output, as each additional unit produced adds more to revenue than to costs.

A Perfectly Competitive Firm's Marginal Cost of Producing a Good