3. Suppose a perfectly competitive firm is operating at a level of output such that P> MC. Would you advise this firm to keep producing at this level or should it increase or decrease its output? Why? (Hint: it will help you to draw a graph for a perfectly competitive firm in short run equilibrium. The level of profit in equilibrium does not matter).

3. Suppose a perfectly competitive firm is operating at a level of output such that P> MC. Would you advise this firm to keep producing at this level or should it increase or decrease its output? Why? (Hint: it will help you to draw a graph for a perfectly competitive firm in short run equilibrium. The level of profit in equilibrium does not matter).

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 33CTQ: Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the...

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Similar questions

Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?
Explain how the profit-maximizing rule of setting P=MC leads a perfectly competitive market to be allocatively efficient.
Briefly explain the reason for the shape of a marginal revenue curve for a perfectly competitive firm.
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