A perfectly competitive firm maximizes profit by producing a level of output where marginal cost is equal to price.

Question

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In a perfectly competitive market, firms maximize profit by producing at a level where the marginal cost (MC) of producing one more unit is equal to the market price (P). This ensures that the firm is producing efficiently and not missing out on potential profits by producing too little or incurring losses by producing too much.

A Perfectly Competitive Firm Maximizes Profit by Producing a Level