A Perfectly Competitive Firm's Marginal Revenue Exceeds Its Marginal Cost

question 197

Multiple Choice

A perfectly competitive firm's marginal revenue exceeds its marginal cost at its current output. To increase its profit, the firm will

• A) lower its price.
• B) raise its price.
• C) decrease its output.
• D) increase its output.

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Definitions:

Comparative Advantage

The ability of an entity to produce goods or services at a lower opportunity cost than others, leading to more efficient trading possibilities.

India

A country in South Asia, known for its diverse culture, historical heritage, and as the world's largest democracy.

Foreign Licensing

Involves a company granting a foreign entity the rights to produce and market its product or use its technology in a foreign country.

U.S. Clothing Manufacturer

A company based in the United States that produces clothing and apparel items for distribution and sale.