Suppose that in a perfectly competitive industry,the market price of the product is $12.Firm A is producing the output level at which average total cost equals marginal cost,both of which are $10.To maximize its profits,Firm A should

Question

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Firm A should expand its output because the market price ($12) is higher than its marginal cost ($10), indicating that producing more will increase profits.

Suppose That in a Perfectly Competitive Industry,the Market Price of the Product