Assume a perfectly competitive firm sells its output for $150 per unit.At its current 2,000 units of output,marginal cost is $180 and increasing,and average variable cost is $160.Assuming it wants to maximize its profits,it should:

Question

Quizplus · Accepted Answer

At the current output level, marginal cost is greater than price, indicating that the firm is losing money on each additional unit produced. To maximize profits, the firm should reduce output until marginal cost equals price.

Assume a Perfectly Competitive Firm Sells Its Output for $150