Consider the following diagram where a perfectly competitive firm faces a price of $40. Figure 8.1
-Refer to Figure 8.1. At the profit-maximizing level of output,
A) AVC is minimized.
B) ATC is minimized.
C) MC is minimized.
D) total cost is minimized.
E) no costs are minimized.

Question

Consider the following diagram where a perfectly competitive firm faces a price of $40.  Figure 8.1
-Refer to Figure 8.1. At the profit-maximizing level of output,
A) AVC is minimized. 
B) ATC is minimized. 
C) MC is minimized. 
D) total cost is minimized. 
E) no costs are minimized.

Quizplus · Accepted Answer

At the profit-maximizing level of output, firms equate marginal cost (MC) to marginal revenue (MR), not minimizing any specific cost.

Consider the Following Diagram Where a Perfectly Competitive Firm Faces