You are running a business in a perfectly competitive market.Your product sells for $5 and your marginal costs rise as output rises.
(a)If the cost of producing another unit of output is $4,what should you do? What will happen to your profit?
(b)If the cost incurred from your last unit of output produced is $6,what has happened to your profit? What should you do about this?
(c)What general rule do the above examples suggest about how a firm should determine the level of output to produce so as to maximize profit?

Question

Quizplus · Accepted Answer

The Answer of You are running a business in a perfectly competitive market.Your product sells for $5 and your marginal costs rise as output rises.
(a)If the cost of producing another unit of output is $4,what should you do? What will happen to your profit?
(b)If the cost incurred from your last unit of output produced is $6,what has happened to your profit? What should you do about this?
(c)What general rule do the above examples suggest about how a firm should determine the level of output to produce so as to maximize profit?

You Are Running a Business in a Perfectly Competitive Market