As a perfectly competitive firm produces more and more of a good, its economic profit

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In a perfectly competitive market, as a firm increases production, its economic profit initially increases due to economies of scale and efficient allocation of resources. However, as production continues to increase beyond the optimal point, the marginal cost of production also increases, leading to a decrease in economic profit. This is because the price in a perfectly competitive market is determined by the market and remains constant regardless of how much a single firm produces, so after reaching the optimal level of production, the cost of producing an additional unit (marginal cost) will eventually exceed the market price, causing economic profit to decrease.

As a Perfectly Competitive Firm Produces More and More of a Good