In a perfectly competitive market, output price is equal to the marginal cost of production.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms sell goods at the prevailing market price, and because firms are price takers and cannot influence the price, they must produce at the lowest possible cost. This means that firms will produce where marginal cost equals price to maximize their profits. Therefore, in a perfectly competitive market, output price is equal to the marginal cost of production.

In a Perfectly Competitive Market, Output Price Is Equal to the Marginal