A perfectly competitive firm facing a price of $50 decides to produce 500 widgets. Its marginal cost of producing the last widget is $50. If the firm's goal is maximize profit, it should:

Question

Quizplus · Accepted Answer

In perfect competition, profit is maximized when marginal cost equals marginal revenue (price). Here, the price is $50, and the marginal cost is also $50, so the firm is maximizing profit by producing 500 widgets.

A Perfectly Competitive Firm Facing a Price of $50 Decides