When the profit-maximizing output level for a firm can be decided by setting output at the level where price is equal to marginal cost, the market structure is
A) perfect competition
B) monopolistic competition
C) duopoly
D) monopoly
E) oligopoly

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms decide on the profit-maximizing level of output by setting it where the price (determined by the market) equals the marginal cost of production. This is because, in perfect competition, firms are price takers and can sell as much as they want at the market price.

When the Profit-Maximizing Output Level for a Firm Can Be