In a perfectly competitive market,a firm maximizes its profit by producing the quantity of output at which

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm can sell as much output as it wants at the prevailing market price. Therefore, to maximize its profit, the firm should produce the quantity of output at which marginal cost (the cost of producing an additional unit) equals the market price (the revenue earned from selling that unit). Any quantity produced beyond this point would result in a higher cost than revenue earned and decrease the firm's profit. Therefore, choice B is the correct answer.

In a Perfectly Competitive Market,a Firm Maximizes Its Profit by Producing