If a competitive firm maximizes short-run profits by producing some quantity of output,which of the following must be true at that level of output?

Question

Quizplus · Accepted Answer

At the profit-maximizing level of output, a competitive firm must satisfy the condition that marginal revenue (MR) equals marginal cost (MC). This is because MR represents the additional revenue earned from selling one more unit of output, while MC represents the additional cost incurred from producing one more unit of output. By setting MR equal to MC, the firm ensures that it is producing the quantity of output that maximizes its profit.

If a Competitive Firm Maximizes Short-Run Profits by Producing Some