A profit-maximizing perfect competitor will ___________ operate at that output at which MC = MR.

Question

Quizplus · Accepted Answer

A profit-maximizing perfect competitor will always operate at that output at which MC = MR because in perfect competition, the marginal revenue earned by the firm is equal to the price of the good, which is also equal to the marginal cost of producing that good. Therefore, in order to maximize profits, the firm will produce at the level of output at which its marginal cost is equal to the price of the good, or the revenue earned from producing an additional unit.

A Profit-Maximizing Perfect Competitor Will ___________ Operate at That Output