When price is greater than marginal cost for a firm in a competitive market,
A) marginal cost must be falling.
B) the firm must be minimizing its losses.
C) there are opportunities to increase profit by increasing production.
D) the firm should decrease output to maximize profit.

Question

Quizplus · Accepted Answer

When price is greater than marginal cost, the firm can increase its profit by producing more units, as each additional unit adds more to revenue than to cost.

When Price Is Greater Than Marginal Cost for a Firm