If a purely competitive firm is maximizing economic profit,
A)it is necessarily maximizing per-unit profit.
B)it may or may not be maximizing per-unit profit.
C)then per-unit profit will be minimized.
D)it is necessarily overallocating resources to its product.

Question

Quizplus · Accepted Answer

In a purely competitive market, a firm maximizes economic profit by producing at the level where marginal cost equals marginal revenue. This does not necessarily mean it is maximizing per-unit profit, as per-unit profit depends on the difference between average total cost and price, which can vary independently of the marginal cost and marginal revenue equality condition.

If a Purely Competitive Firm Is Maximizing Economic Profit