Which of the following does not represent a profit-maximizing condition for a firm operating in a perfectly competitive industry?
A) $P = M C$.
B) $M C = M R$.
C) $M C$ must be increasing.
D) $M C$ must be falling.

Question

Which of the following does not represent a profit-maximizing condition for a firm operating in a perfectly competitive industry? 
A) $P = M C$.
B) $M C = M R$.
C) $M C$ must be increasing.
D) $M C$ must be falling.

Quizplus · Accepted Answer

In a perfectly competitive market, profit maximization occurs where the marginal cost (MC) equals the marginal revenue (MR), and the price (P) equals MR. The condition that MC must be increasing is correct for profit maximization, as it ensures that the firm is producing at a level where the cost of producing one more unit is just covered by the revenue it generates, indicating the point of maximum profit. The statement that MC must be falling does not represent a profit-maximizing condition, as it would imply the firm could increase profit by expanding production, which contradicts the principle of producing where MC equals MR for maximum profit.

Which of the Following Does Not Represent a Profit-Maximizing Condition P=MCP = M CP=MC

Which of the Following Does Not Represent a Profit-Maximizing Condition $P = M C$