At the profit-maximizing level of output for a perfectly competitive firm, price equals marginal cost.Which of the following is also true?
A)The difference between total revenue and total cost is the greatest.
B)Total revenue equals total cost.
C)Average revenue equals average total cost.
D)Marginal profit equals marginal cost.

Question

Quizplus · Accepted Answer

At the profit-maximizing level of output, a perfectly competitive firm produces where price equals marginal cost. This means that the firm earns a profit equal to the difference between total revenue and total cost, which is the greatest possible profit. Therefore, option A is true. Options B, C, and D are not necessarily true at the profit-maximizing level of output for a perfectly competitive firm.

At the Profit-Maximizing Level of Output for a Perfectly Competitive