A profit-maximizing perfectly competitive firm will

Question

Quizplus · Accepted Answer

A profit-maximizing perfectly competitive firm will produce an output at which marginal cost equals marginal revenue, as it wants to produce the quantity that generates the highest profit. Additionally, in a perfectly competitive market, the price is equal to the marginal revenue, so the firm will also produce at the point where marginal cost equals price. Lastly, the firm will have a marginal cost curve that intersects the minimum point of its average total cost curve because in the long run, firms in a perfectly competitive market will produce at the lowest point on their average total cost curve to maximize profits. Therefore, all of the above is applicable, and the best choice is D.

A Profit-Maximizing Perfectly Competitive Firm Will