A purely competitive firm's output is currently such that its marginal cost is $4 and marginal revenue is $5.Assuming profit maximization,the firm should:

Question

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For a purely competitive firm, profit maximization occurs at the point where marginal cost (MC) equals marginal revenue (MR). In this case, the firm's MC is $4 and MR is $5, meaning that the firm can increase its profits by producing more (output) as long as the additional cost of producing another unit (MC) is less than the additional revenue generated from selling that unit (MR). Therefore, the firm should leave its price unchanged and raise its output to maximize its profits. Choice A would result in lower profits due to lower prices, while choices B and D would result in lower profits due to lower output.

A Purely Competitive Firm's Output Is Currently Such That Its