A profit-maximizing firm in a competitive market discovers that,at its current level of production,price is greater than marginal cost.What should it do

Question

Quizplus · Accepted Answer

When the price is greater than marginal cost, the firm is not producing enough to maximize profits. In this situation, the firm should increase its output until the price equals marginal cost. This will allow the firm to increase its profits because it will be able to sell more units at the higher price while incurring only a small increase in cost. Therefore, choice D is the best option.

A Profit-Maximizing Firm in a Competitive Market Discovers That,at Its