Respuesta :
Answer:The Price is greater than Marginal Cost the firm should produce more quantity.
Explanation:
Firms operating in the perfect market are price takers, They Maximize their profits when Price Equals Marginal Costs. The profit maximizing quantity is realized when price equals the price of producing one additional unit (Price = Marginal cost).
The Price is greater than Marginal Cost, This tells us that the firm can still earn more economic profits from producing more quantity. The firm should produce more quantity up until Price equals marginal cost. When Price Equals marginal cost, at that quantity level profit is maximized because the firm makes no profit from producing more units
Answer:
This firm should increase production.
Explanation:
A perfectly competitive firm is a firm that operates in a perfect competitive market where there are many sellers of the same product, entry and exist of firms to the market are free and easy, and each firm is a price taker.
Given the fact each firm in a perfect competitive market is a price taker, i.e. they cannot influence the price, a firm that is earning positive economic profit where marginal cost is greater than price should increase production until its marginal cost (MC) is equal to the price (P), i.e. MC = P, which is the point at which profit is maximized.
Therefore, this firm should increase production.
