A firm in a competitive market will maximize profit when the level of production is such that marginal cost equals price.

Question

Quizplus · Accepted Answer

This statement is true according to the profit maximization rule in a competitive market, where firms aim to produce at the point where marginal cost equals price (MC=P) to maximize profit. At this point, the firm is producing the optimal quantity where the cost of producing an additional unit is equal to the revenue obtained from selling it.

A Firm in a Competitive Market Will Maximize Profit When