If a competitive firm is currently producing a level of output at which profit is not maximized,then what must be the case for the firm

Question

Quizplus · Accepted Answer

If a firm is not maximizing profit, it means that the marginal revenue is not equal to the marginal cost. Maximizing profit requires setting the output level where marginal revenue equals marginal cost. If the firm is producing less than the output level where MR=MC, then it could increase profits by increasing output. If the firm is producing more than the output level where MR=MC, then it could increase profits by decreasing output.

If a Competitive Firm Is Currently Producing a Level of Output