In a perfectly competitive market,the market price is $23.At the current level of output,a firm has a marginal cost of $28.What should the firm do?

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers, meaning they cannot influence the market price. If the marginal cost ($28) is higher than the market price ($23), the firm is not covering its variable costs for the additional units produced. Therefore, producing less could decrease the marginal cost, potentially making it closer to or lower than the market price, which could help in maximizing profit or minimizing losses.

In a Perfectly Competitive Market,the Market Price Is $23