If a perfectly competitive firm wanted to maximize its total revenues,it would produce
A)The output where MC equals price.
B)As much as it is capable of producing.
C)The output where the ATC curve is at a minimum.
D)The output where the marginal cost curve is at a minimum.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the firm is a price taker and has no control over the price. Therefore, to maximize total revenues, the firm should produce as much as it is capable of producing, as long as the price is greater than the average variable cost. Beyond that point, production would lead to losses. Therefore, the correct choice is B – produce as much as it is capable of producing.

If a Perfectly Competitive Firm Wanted to Maximize Its Total