Firms in perfectly competitive markets who wish to maximize profits should produce:

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms should produce where marginal cost equals marginal revenue because at this point, they can maximize their profits. If they produce beyond this point, their marginal cost will be higher than marginal revenue, resulting in losses, and if they produce less than this point, their marginal revenue will be higher than marginal cost, resulting in missed profit opportunities. Therefore, option C, which suggests producing at the level where marginal cost equals marginal revenue, is the correct choice.

Firms in Perfectly Competitive Markets Who Wish to Maximize Profits