Assume a perfectly competitive firm is producing a level of output at which MR

Name: Assume a perfectly competitive firm is producing a level of output at which MR < MC.What will happen as the firm moves to its profit-maximizing equilibrium?
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Question

Assume a perfectly competitive firm is producing a level of output at which MR < MC.What will happen as the firm moves to its profit-maximizing equilibrium?

Quizplus · Accepted Answer

In a perfectly competitive market, a firm maximizes profit where marginal revenue (MR) equals marginal cost (MC). If MR < MC, the firm is producing too much and will reduce output to increase profit, causing MC to fall until MR = MC.

Assume a Perfectly Competitive Firm Is Producing a Level of Output