To maximize profit, a firm in a competitive market increases output until:
A) P = TC.
B) P = AR.
C) P = MC.
D) P = AC.

Question

Quizplus · Accepted Answer

In a competitive market, the firm should produce where the marginal cost (MC) equals the market price (P) in order to maximize profit. If the firm produces at a lower output, they could increase their profit by producing more. If they produce at a higher output, the marginal cost would exceed the market price, resulting in losses. Therefore, the answer is C.

To Maximize Profit, a Firm in a Competitive Market Increases