Assume that a smartphone maker operates in a perfectly competitive market producing 25,000 smartphones per day.At this output level,price is less than this firm's marginal cost.It follows that producing one more smartphone will cause this firm's

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers and cannot influence the market price. If the price is less than the firm's marginal cost, it means that the firm is incurring losses on the last unit produced. Therefore, producing one more smartphone will increase the firm's total cost, which will further decrease its profits. Thus, the correct choice is C - profits will decrease.

Assume That a Smartphone Maker Operates in a Perfectly Competitive