If a perfectly competitive firm is producing a quantity where MC = MR,then profit:

A) is maximized.
B) can be increased by increasing production.
C) can be increased by decreasing production.
D) can be increased by decreasing the price.

Question

Jaennard Ger-El Vinuya · Accepted Answer

Final Answer : A, Explanation :  In perfect competition, profit is maximized at the level of output where marginal cost (MC) equals marginal revenue (MR), also known as the profit-maximizing output level. Any deviation from this output level would result in lower profits. Therefore, the firm cannot increase profits by increasing or decreasing production or decreasing the price. The only way to increase profits is to reduce costs, which would shift the MC curve downwards, allowing the firm to produce the same quantity of output at a lower cost.

If a perfectly competitive firm is producing a quantity where MC = MR,then profit:

A) is maximized.
B) can be increased by increasing production.
C) can be increased by decreasing production.
D) can be increased by decreasing the price.

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Learning Objectives

Related questions

If a perfectly competitive firm is producing a quantity where MC = MR,then profit:A) is maximized.B) can be increased by increasing production.C) can be increased by decreasing production.D) can be increased by decreasing the price.

Definitions

Learning Objectives

Learning Objectives

Related questions

If a perfectly competitive firm is producing a quantity where MC = MR,then profit:

A) is maximized.
B) can be increased by increasing production.
C) can be increased by decreasing production.
D) can be increased by decreasing the price.