If a perfectly competitive firm maximizes short-run profits, its marginal revenue will be positive and less than its price.

Question

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In a perfectly competitive market, a firm is a price taker, meaning it has no control over the market price. Therefore, to maximize short-run profits, the firm should produce where its marginal cost equals the market price. In such a scenario, the firm's marginal revenue will be positive but less than its price since any additional unit sold will receive the same market price.

If a Perfectly Competitive Firm Maximizes Short-Run Profits, Its Marginal