If a firm faces a price of $12 regardless of how many units it produces and the marginal cost is constant at $10 regardless of how many units it produces, then theoretically, the firm should never stop producing.

Question

Quizplus · Accepted Answer

Given that the price ($12) is higher than the marginal cost ($10) for each unit produced, the firm will continue to make a profit on each additional unit produced, thus incentivizing continuous production.

If a Firm Faces a Price of $12 Regardless of How