Marginal adjustments to production end when firms in competitive markets experience a price equal to marginal revenue.

Question

Quizplus · Accepted Answer

In competitive markets, firms will continue to produce as long as price is greater than or equal to marginal cost. Once price equals marginal revenue, the firm will have maximized its profit and marginal adjustments to production will no longer be necessary. Therefore, marginal adjustments to production end when firms in competitive markets experience a price equal to marginal revenue.

Marginal Adjustments to Production End When Firms in Competitive Markets