Stating that marginal revenue equals price is equivalent to saying that marginal cost equals price for the profit maximizing quantity.

Question

Quizplus · Accepted Answer

This is because, in a perfectly competitive market, the firm is a price taker, meaning it has no control over the market price. Therefore, the marginal revenue that the firm gets from producing one more unit of output is the same as the market price. And since the profit-maximizing quantity is when marginal cost equals marginal revenue, this is also equivalent to saying that marginal cost equals price at the profit-maximizing quantity.

Stating That Marginal Revenue Equals Price Is Equivalent to Saying