If a firm can maximize its profit by producing the output where price is equal to its marginal cost, the firm is operating in

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers and must produce at the point where price equals marginal cost in order to maximize profit. This is because in a perfectly competitive market, there are no barriers to entry and many firms producing identical goods, so any firm that tries to charge a price above its marginal cost will not be able to sell any goods, as consumers will simply buy from another firm charging a lower price.

If a Firm Can Maximize Its Profit by Producing the Output