Because of the relationship between a perfectly competitive firm's demand curve and its marginal revenue curve, the profit maximization condition for the firm can be written as:
A) P = MR.
B) P = AVC.
C) AR = MR.
D) P = MC.
E) P = AC.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the profit maximization condition is where price (P) equals marginal cost (MC), as firms are price takers and maximize profit where marginal revenue (MR) equals marginal cost (MC). Since P = MR in perfect competition, P = MC.

Because of the Relationship Between a Perfectly Competitive Firm's Demand