In a competitive market if a firm is operating at a point where MC is greater than price it will attempt to cut back production.

Question

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If a firm is operating at a point where MC (Marginal cost) is greater than price, it means that the cost of producing an additional unit is greater than the revenue gained from selling that unit. Therefore, producing more units would result in losses for the firm. In this case, the firm would attempt to cut back production to a level where MC is equal to price or where MC is just below price to maximize its profits.

In a Competitive Market If a Firm Is Operating at a Point