The table given below shows the price of each unit of the product manufactured by a firm and the marginal cost of producing different units of the output.Table: 10.1

-In which of the following situations will the profit of a perfectly competitive firm always increase with an increases in its output?

Question

The table given below shows the price of each unit of the product manufactured by a firm and the marginal cost of producing different units of the output.Table: 10.1
 
-In which of the following situations will the profit of a perfectly competitive firm always increase with an increases in its output?

Quizplus · Accepted Answer

A perfectly competitive firm will always increase profit by producing more output when the price is greater than the marginal cost. This is because the additional revenue from selling one more unit (marginal revenue) is greater than the additional cost of producing that unit (marginal cost), which means that each additional unit sold will contribute positively to the firm's profit. When the price is less than marginal cost or equal to it, producing more output will actually decrease profit. Therefore, option C is the correct answer.

The Table Given Below Shows the Price of Each Unit