If the price of copper pipes is $70 in a perfectly competitive market, and a firm is producing a quantity at which the marginal cost is $65, is this firm maximizing profit?

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the price of the product is equal to the marginal revenue (MR). For profit maximization, a firm should produce until its marginal cost (MC) equals the marginal revenue. Since the price (and thus MR) is $70 and the MC is $65, the firm should produce more to increase its output until MC equals MR, to maximize profit.

If the Price of Copper Pipes Is $70 in a Perfectly