A perfectly competitive firm will maximize total profit when
A) total revenue is at a maximum
B) total cost is at a minimum
C) total revenue exceeds total cost by the greatest amount
D) average total cost exceeds average variable cost by the greatest amount

Question

Quizplus · Accepted Answer

A perfectly competitive firm maximizes total profit when the difference between total revenue and total cost is the greatest, which is option C. This is because profit maximization occurs at the point where the marginal cost of producing an additional unit equals the marginal revenue received from selling that unit, leading to the largest possible difference between total revenue and total costs.

A Perfectly Competitive Firm Will Maximize Total Profit When