A perfectly competitive firm maximizes its profits by

Question

Quizplus · Accepted Answer

A perfectly competitive firm maximizes its profits by choosing the optimal level of output, where marginal cost equals marginal revenue. This is because in a perfectly competitive market, the firm is a price-taker and cannot influence the market price. Therefore, the optimal strategy for the firm is to produce at the level where the cost of producing an additional unit (marginal cost) is equal to the revenue earned from selling that additional unit (marginal revenue).

A Perfectly Competitive Firm Maximizes Its Profits by