For a perfectly competitive firm, profit is maximized at the output level where i. total revenue exceeds total cost by the largest amount.
Ii. marginal revenue equals marginal cost.
Iii. price equals marginal cost.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, profit maximization occurs where marginal revenue equals marginal cost (ii) and where price equals marginal cost (iii), as price equals marginal revenue in perfect competition. Additionally, profit is maximized when total revenue exceeds total cost by the largest amount (i).

For a Perfectly Competitive Firm, Profit Is Maximized at the Output