In a purely competitive market, the maximum profit comes at that output where marginal cost equals price.

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In a purely competitive market, the price is determined by the intersection of the market demand and market supply curves. Therefore, the firm is a price taker and cannot influence the price. The firm's profit-maximizing output level is where marginal cost (MC) equals price (P) since the firm wants to produce up to the point where the last unit produced adds to the total revenue equal to the cost of producing it. This is because in a competitive market, a firm cannot charge a higher price than its competitors since consumers can easily switch to the products of the firm's competitors. Therefore, the firm must produce at the lowest possible cost to remain competitive.

In a Purely Competitive Market, the Maximum Profit Comes at That