A price-taker firm will tend to expand its output so long as its
A) marginal revenue is positive.
B) marginal revenue is greater than the market price.
C) marginal revenue is less than the market price.
D) marginal cost is less than the market price.

Question

Quizplus · Accepted Answer

A price-taker firm will expand output as long as marginal cost is less than the market price, as this maximizes profit by ensuring that the cost of producing an additional unit is less than the revenue gained from selling it.

A Price-Taker Firm Will Tend to Expand Its Output So