Final answer:
To maximize profit in a competitive market when the price is greater than marginal cost, a firm should increase production until price equals marginal cost.
Step-by-step explanation:
When the price is greater than the marginal cost for a firm in a competitive market, the firm should aim to maximize profit by increasing production since there are opportunities to increase profit.
The fundamental principle in a competitive market is that firms should produce where marginal cost equals marginal revenue to maximize profit. In a scenario where the price exceeds the marginal cost, it indicates that producing additional units will generate more revenue than the cost of producing those units.
Therefore, choice c. "There are opportunities to increase profit by increasing production" aligns with the profit-maximizing strategy. By increasing production, the firm can sell additional units at a price higher than the incremental cost of producing those units, thereby increasing total profit. This strategy allows the firm to benefit from the price exceeding the marginal cost, maximizing its overall profit in the competitive market setting.