When perfectly competitive firms produce at a quantity where marginal revenue equals marginal costs, they are
A) minimizing profits.
B) maximizing output.
C) employing resources until the extra cost of producing the last unit just equals the price of that unit.
D) employing more people and expanding total output in the process.
E) operating at a loss.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms produce at a quantity where marginal revenue (MR) equals marginal costs (MC) to ensure they are allocating resources efficiently. This point ensures that the cost of producing the last unit is exactly equal to the revenue gained from selling that unit, which is a condition for maximizing profits, not necessarily maximizing output or employing more people.

When Perfectly Competitive Firms Produce at a Quantity Where Marginal