Perfectly competitive firms produce at the quantity where marginal revenue ______ marginal cost.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price-takers and face a horizontal demand curve, meaning that the marginal revenue equals the price of the good. Since profit is maximized where marginal revenue equals marginal cost, perfectly competitive firms produce at the quantity where marginal revenue equals marginal cost. Therefore, the correct answer is B, where marginal revenue equals marginal cost.

Perfectly Competitive Firms Produce at the Quantity Where Marginal Revenue