If a firm finds that its MR exceeds its MC, then the Maximum Profit rules require the firm to:
a) increase its output in perfect, but not necessarily imperfect competition
b) increase its output in imperfect, but not necessarily in perfect competition.
c) increase its output in both perfect and imperfect competition
d) decrease its output in both perfect and imperfect competition
e) do none of the above.© BrainMass Inc. brainmass.com December 24, 2021, 4:59 pm ad1c9bdddf
SOLUTION This solution is FREE courtesy of BrainMass!
Answer: c) increase its output in both perfect and imperfect competition.
Maximum profit rule says that profit is maximized when MR =MC. This is true both for perfect and imperfect competition. Thus the firm should increase its output till MR=MC.