A firm maximizes its profit by producing output up to the point where marginal revenue equals marginal cost

Question

Quizplus · Accepted Answer

The principle of maximizing profit by producing output up to the point where marginal revenue equals marginal cost is applicable to firms operating in perfectly competitive, monopolistically competitive, or monopolistic markets. In perfectly competitive markets, the firm is a price taker, so its marginal revenue equals the market price. In monopolistically competitive and monopolistic markets, the firm has some degree of market power, so it can influence the market price to some extent. However, the principle of equating marginal revenue with marginal cost remains the same. Therefore, the best choice is D.

A Firm Maximizes Its Profit by Producing Output Up to the Point