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.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the firm is a price taker and cannot influence the market price. Therefore, to maximize its total revenue, it would have to produce as much output as it is capable of producing, since total revenue increases as output increases as long as the price is constant. If the firm tried to set a higher price and produce a smaller output, it would lose all its customers to other firms in the market. Therefore, producing at the maximum level is the best choice to maximize revenue in a perfectly competitive market.

If a Perfectly Competitive Firm Wanted to Maximize Its Total