Question

A competitive firm has been selling its output for $10 per unit and has been maximizing its profit. Then, the price rises to $14, and the firm makes whatever adjustments are necessary to maximize its profit at the now-higher price. Once the firm has adjusted, its:___________.

1. marginal revenue is lower than it was previously.

2. marginal cost is lower than it was previously.

3. quantity of output is higher than it was previously

4. all of the above are correct.

Answer 1

The answer is 3. Quantity of output is higher that it was previously

Step-by-step explanation:

A perfectly competitive firm acts as a price taker, so its calculation of total revenue is made by taking the given market price and multiplying it by the quantity of output that the firms chooses.