Profits can be maximized by equating MR = MC = Price
A) only in perfectly competitive markets.
B) only in monopoly markets.
C) only in discriminating monopoly markets.
D) only with government price controls.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers and therefore the price is given. Since all firms produce an identical product, the price is determined solely by market supply and demand. In this type of market, the firm's marginal revenue (MR) curve is a horizontal line at the market price, meaning that each additional unit sold will bring in the same amount of revenue for the firm. The firm will maximize profits by producing where MR=MC=Price, since any deviation from this level of output would result in lower profits.

Profits Can Be Maximized by Equating MR = MC =