a perfectly competitive firm should expand output when,

A perfectly competitive firm should expand output when, and only when, the price is greater than marginal cost. The reason this happens is that a perfectly competitive firm maximizes profit by keeping its price equal to marginal cost. When the monopoly sets its price lower than the marginal cost it will generate more total revenue because of the elasticity of the demand curve in oligopoly market structure; however, it will also maximize profit at a higher level which means that consumers are willing to pay a higher equilibrium price for an identical quantity of goods. Title: The Perfectly Competitive Firm Description:a perfectly competitive firm should expand output when,

a perfectly competitive firm should expand output when, and only when, the price is greater than marginal cost. The reason this happens is that a perfectly competitive firm maximizes profit by keeping its price equal to marginal cost. When the monopoly sets its price lower than the marginal cost it will generate more total revenue because of the elasticity of the demand curve in oligopoly market structure; however, it will also maximize profit at a higher level which means that consumers are willing to pay a higher equilibrium price for an identical quantity of goods. What Does It Mean? A perfect competition (or “perfectly” competitive) company must follow one simple rule – if prices go up and they believe there’s

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