If the marginal cost of producing a good for a perfectly competitive firm is $50 and the market price of the good is $100,the firm should ________.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm should produce where marginal cost equals the market price to maximize profits. In this case, the market price of the good is $100 and the marginal cost of producing a good is $50. This means the firm is earning a profit of $50 per unit sold. Therefore, to maximize its profit, the firm should increase its output as long as the marginal cost remains below the market price. So, the best choice is to increase its output.

If the Marginal Cost of Producing a Good for a Perfectly