A perfectly competitive firm 39 s marginal cost exceeds its marginal revenue at its current output T...........

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

increase its output.

raise its price.

lower its price.

decrease its output.

- In a perfectly competitive market, firms are price takers.

- Marginal Cost (MC) is the cost of producing one more unit.

- Marginal Revenue (MR) is the additional revenue from selling one more unit.

- If MC exceeds MR, producing that extra unit decreases profit.

- Option 1: Increase output – This isn't correct because it would increase costs without a corresponding increase in revenue.

- Option 2: Raise price – Not applicable, as firms can't set prices in a perfectly competitive market.

- Option 3: Lower price – Incorrect, since prices are determined by the market.

- Option 4: Decrease output – This helps by eliminating units where MC > MR, thus increasing overall profit.

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