For a perfectly competitive firm operating at the profit-maximizing output level in the short run,

Question

Quizplus · Accepted Answer

In perfect competition, firms are price takers and must sell their output at market price. Therefore, the marginal revenue (MR) curve is horizontal and equal to the market price. In order to maximize profits, a firm should produce at the point where marginal cost (MC) equals price, since producing any more or less would lead to lower profits. Therefore, the correct answer is B: MC = price.

For a Perfectly Competitive Firm Operating at the Profit-Maximizing Output