All along the beach in San Diego, California are shops which rent boogie boards for $3 per hour. Tourists perceive that all rental boogie boards are identical and there are no restrictions on entry and exit in the boogie board market. Suppose Surf's Up is a boogie board rental shop. To maximize profits, Surf's Up would produce a quantity where

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To maximize profits, Surf's Up would produce the quantity where marginal revenue is equal to marginal cost. At this point, the shop would not produce any more boogie boards because the cost of producing an additional unit would be greater than the revenue received from renting it out. In this case, there is perfect competition in the market, so the price of each boogie board is equal to the marginal revenue received from renting it out. Therefore, producing at the point where marginal revenue is equal to marginal cost would give Surf's Up the highest possible profits.

All Along the Beach in San Diego, California Are Shops