In a perfectly competitive market, the market price is $20. At the current level
ID: 1225557 • Letter: I
Question
In a perfectly competitive market, the market price is $20. At the current level of output, a firm has a marginal cost of $15. What should the firm do?
nothing, it is currently maximizing profit
raise the price of its product
shut down
produce a larger output to make more profit
produce less output to make more profit
A)nothing, it is currently maximizing profit
B)raise the price of its product
C)shut down
D)produce a larger output to make more profit
E)produce less output to make more profit
Explanation / Answer
Answer.) D. produce a larger output to make more profit.
IN a competitive market, a price taker firm maximises profit by equating Price to Marginal cost. by producing more output, the firm can make more profits.
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