When marginal revenue equals marginal cost, a perfectly competitive firm is

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When marginal revenue equals marginal cost, the firm is maximizing its profit. This is because at this point, the firm is producing the output level where the additional revenue gained by producing one more unit is exactly equal to the additional cost of producing that one more unit. Any increase or decrease in production beyond this point would lead to a decrease in profit. Therefore, the optimal level of production for a perfectly competitive firm is where MR=MC, which maximizes its profits.

When Marginal Revenue Equals Marginal Cost, a Perfectly Competitive Firm