A perfectly competitive firm facing a price of $50 decides to produce 500 widgets. Its marginal...

A perfectly competitive firm facing a price of $50 decides to produce 500 widgets. Its marginal cost of producing the last widget is $50. If the firm’s goal is to maximize profit, it should:

• Produce more widgets

• Produce fewer widgets

• Continue producing 500 widgets

• Shut down

Solutions

Expert Solution

Answer
• Continue producing 500 widgets
The perfectly competitive firm maximizes profit at MC=P
and here the price =marginal cost=$50
so the firm should Continue producing 500 widgets

Rahul Sunny answered 1 year ago

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