If a perfectly competitive firm is producing a level of output where its marginal cost is greater than market price, it should raise its price.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers, meaning they cannot set their own prices but must accept the market price. If marginal cost is greater than the market price, the firm should reduce output to lower costs, not raise its price.

If a Perfectly Competitive Firm Is Producing a Level of Output