A perfectly-competitive firm produces 2,000 units of a good during some period of time. For the 2,000th unit, marginal cost is equal to marginal revenue. The difference between marginal revenue and marginal cost is greater for the first unit the firm produces than the second, and greater for the second than the third, and so on. Furthermore, marginal revenue is greater than marginal cost for every unit from the first to the 1,999th. It follows that the

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In a perfectly competitive market, the marginal revenue is constant and equal to the price. Since marginal cost equals marginal revenue at the 2,000th unit and is less than marginal revenue for all previous units, the marginal cost must be increasing, indicating an upward-sloping marginal cost curve.

A Perfectly-Competitive Firm Produces 2,000 Units of a Good During