The loss-minimizing output for the perfectly competitive firm occurs at the point at which

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price-takers and face a horizontal demand curve. Therefore, the marginal revenue (MR) is equal to the price. To maximize profit or minimize losses, a firm should produce where marginal cost (MC) equals the price. Since MR equals the price, the loss-minimizing output occurs where MR equals MC. Therefore, choice C is the correct answer.

The Loss-Minimizing Output for the Perfectly Competitive Firm Occurs at the Point