The competitive firm maximizes profit when it produces output up to the point where

Question

Quizplus · Accepted Answer

The competitive firm maximizes profit at the output level where marginal cost equals marginal revenue. This is because producing an additional unit of output will increase revenue by the amount of marginal revenue, but also increase costs by the amount of marginal cost. At the output level where these two values are equal, the firm is no longer able to increase profit by producing more or less. The other options (A, B, and C) are not correct because they do not refer to the point of profit maximization.

The Competitive Firm Maximizes Profit When It Produces Output Up