Under perfect competition, the lure of profits makes producers try to equate marginal cost and price.

Question

Quizplus · Accepted Answer

Under perfect competition, producers cannot influence the market price and must accept the price determined by the market. Therefore, in order to maximize profits, producers will produce up to the point where their marginal cost equals the market price. This is known as the profit-maximizing level of output.

Under Perfect Competition, the Lure of Profits Makes Producers Try