The profit-maximizing rule MC = MR is followed by firms operating within:
A)monopolistic competition but not perfect competition.
B)perfect competition but not monopolistic competition.
C)either monopolistic competition or perfect competition, depending on the costs of production.
D)both monopolistic competition and perfect competition.

Question

Quizplus · Accepted Answer

The profit-maximizing rule MC = MR is a fundamental principle of microeconomics that applies to firms operating in both monopolistic competition and perfect competition. Therefore, choice D is the correct answer. Both types of competition involve maximizing profits by producing where marginal cost equals marginal revenue.

The Profit-Maximizing Rule MC = MR Is Followed by Firms