Because firms in perfectly competitive markets can sell any quantity without driving down prices,they should:

Question

Quizplus · Accepted Answer

In perfectly competitive markets, price is equal to marginal revenue. Therefore, a firm should produce until the marginal cost equals the price (or marginal revenue). At this point, the firm is earning zero economic profit but is still covering its costs. Producing beyond this point would result in losses, as the additional cost would exceed the additional revenue. Therefore, answer D is the best choice, as it suggests producing until the last unit sold earns zero additional profit.

Because Firms in Perfectly Competitive Markets Can Sell Any Quantity