If the market price is $3 and a perfectly competitive firm is producing 1,400 units and the marginal cost to produce the 1,400th unit is $2, the difference between marginal revenue and marginal cost (MR - MC)is zero.

Question

Quizplus · Accepted Answer

If the market price is $3, then the marginal revenue for producing additional units will also be $3. Since the marginal cost for the 1,400th unit is $2, the firm will continue to produce more units as long as the marginal revenue is greater than the marginal cost. Therefore, the MR - MC for producing the 1,400th unit will be $3 - $2 = $1, not zero.

If the Market Price Is $3 and a Perfectly Competitive