Ask Question
16 May, 21:28

A perfectly competitive firm's output is currently such that its marginal revenue is $5 and marginal cost is $4. Assuming profit maximization, the firm should

A. cut price and increase output.

B. raise price and decrease output.

C. leave price unchanged and increase output.

D. leave price unchanged and decrease output.

+2
Answers (1)
  1. 16 May, 21:49
    0
    C) leave price unchanged and increase output.

    Explanation:

    A perfectly competitive firm will maximize its profits when marginal revenue equals marginal cost.

    In this case the marginal revenue ($5) is higher than the marginal cost ($4), therefore the company should increase its output until the marginal cost increases to $5.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A perfectly competitive firm's output is currently such that its marginal revenue is $5 and marginal cost is $4. Assuming profit ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers