A perfectly competitive firm is currently producing at a level of output where its marginal cost is above its average total cost but below the market price.
What would be the effect on price and output if the firm were to maximise its profit?
1 )
effect on output: decrease / effect on price: increase
2 )
effect on output: decrease / effect on price: unchanged
3 )
effect on output: increase / effect on price: decrease
effect on output: increase / effect on price: unchanged
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