Figure 10-1

If the profit-maximizing firm depicted in Figure 10-1 is perfectly competitive, how much output should it produce?

Question

Figure 10-1 ​

If the profit-maximizing firm depicted in Figure 10-1 is perfectly competitive, how much output should it produce?

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price-takers and have no control over the price. Therefore, the firm's goal is to maximize profit by producing where marginal cost (MC) equals price (P). 
In the given graph, point C is where MC intersects with P, which means producing output Qc will maximize the firm's profit. At any other quantity, the firm's profit will be lower.

Figure 10-1 ​ If the Profit-Maximizing Firm Depicted in Figure 10-1 Is Perfectly

Figure 10-1 If the Profit-Maximizing Firm Depicted in Figure 10-1 Is Perfectly