A firm in a perfectly competitive industry is currently producing 150 units of output at a...
A firm in a perfectly competitive industry is currently producing 150 units of output at a price of $55 per unit. If marginal cost is equal to $50 and profit is equal to $500 at that level of output, what should the firm do, if anything, to maximize profit?
Homework Answers
Answer
Increase output
=====
the firm in the market produces at MC=P
where
the P is constant as the firm is price taker and the MC is increasing
as from the given information P>MC means the firm is producing less than P=MC so the firm should increase the output to the level of MC=P so the firm will maximize profit.
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