If a perfectly competitive firm is producing a quantity where P = MC,then profit:

Question

Quizplus · Accepted Answer

When P=MC, the firm is producing at the output level where its marginal revenue (MR) equals its marginal cost (MC), which is also the point of maximum profit. Therefore, the firm should continue producing at this output level to maximize profit. Decreasing the quantity or price would result in lower revenue, while increasing production beyond the point where P=MC would result in higher costs without a corresponding increase in revenue, decreasing profit.

If a Perfectly Competitive Firm Is Producing a Quantity Where