If a perfectly competitive firm's marginal revenue is greater than its marginal cost,as it increases its output,its profit ________ and the price it can charge for its product ________.

Question

Quizplus · Accepted Answer

If a perfectly competitive firm's marginal revenue is greater than its marginal cost, it means that producing an additional unit will add more to the firm's revenue than the cost of producing it. Therefore, producing more will increase the firm's profit. In a perfectly competitive market, the firm has no control over the price it can charge for its product, as it is determined by the market forces of supply and demand. Hence, the price it can charge for its product does not change, and remains the same as determined by the market.

If a Perfectly Competitive Firm's Marginal Revenue Is Greater Than