A competitive firm's profit-maximizing sales quantity ______ when the market price increases.
A) cannot decrease
B) cannot increase
C) may increase or decrease
D) will always decrease

Question

Quizplus · Accepted Answer

A competitive firm's profit-maximizing sales quantity cannot decrease when the market price increases. This is because as the market price increases, the firm's marginal revenue also increases. Therefore, the firm will want to produce and sell more to take advantage of the higher prices and maximize profits.

A Competitive Firm's Profit-Maximizing Sales Quantity ______ When the Market