If a perfectly competitive firm maximises short-run profits, its marginal revenue will be positive and less than its price.

Question

Quizplus · Accepted Answer

In perfect competition, firms are price takers, meaning they have no control over the market price. To maximize profits, a firm will produce where marginal revenue (MR) equals marginal cost (MC). Since MR is the change in total revenue from selling one more unit, and price is the revenue per unit, MR will always be less than price in perfect competition.

If a Perfectly Competitive Firm Maximises Short-Run Profits, Its Marginal