A firm in a perfectly competitive market can maximize its profits by producing:

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the firm is a price taker, which means it has no control over the price of the product. Therefore, the firm can maximize its profit by producing at the output level where marginal cost (MC) equals marginal revenue (MR) because at that output level, the additional revenue earned from producing one more unit is exactly equal to the additional cost incurred. As a result, the profit is maximized because there is no further gain from producing more or less than this output level. Thus, option A is the correct answer.

A Firm in a Perfectly Competitive Market Can Maximize Its