FIGURE 11-2
-Refer to Figure 11-2.In diagram A,the profit-maximizing output for a competitive firm is one where

Question

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In a competitive market, a firm will maximize its profit by producing the quantity where P = AR = MC. This is because in a perfectly competitive market, firms are price takers and they must sell their output at the prevailing market price (P = AR). In order to maximize profit, the firm will produce the quantity where the additional revenue gained from producing one more unit (MR) is equal to the additional cost of producing that unit (MC). This occurs at the intersection of the firm's marginal cost curve and the market demand curve (P = MC). Therefore, the profit-maximizing output for a competitive firm is where P = AR = MC.

FIGURE 11-2 -Refer to Figure 11-2.In Diagram A,the Profit-Maximizing Output for a for a Competitive