Assume that price is greater than average variable cost. If a perfectly competitive firm is producing...

Assume that price is greater than average variable cost. If a perfectly competitive firm is producing at an output where price is $114 and the marginal cost is $102, then the firm is probably producing more than its profitminus−maximizing quantity. True False

Expert Solution

The given statement is false.

Because when a perfectly competitive firm produce more than it's profit-maximizing quantity it's marginal cost exceeds it price. But here output price is greater than marginal cost so this firm is not producing more than it's profit maximizing quantity.

Rahul Sunny answered 2 years ago

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