If a firm competing in a price-taker market seeks to maximize profit, the firm should
A) increase output whenever marginal cost is less than average total cost.
B) increase output whenever marginal revenue is less than marginal cost.
C) choose the output where per-unit profit is greatest.
D) increase output whenever price exceeds marginal cost.

Question

Quizplus · Accepted Answer

In a price-taker market, firms maximize profit by producing where price equals marginal cost (P=MC). If price exceeds marginal cost, increasing output will increase profit.

If a Firm Competing in a Price-Taker Market Seeks to Maximize