In the long run,competitive firms MUST be profit maximizers because if they do not maximize profits,
A) they will not survive.
B) they will not be price takers.
C) they will attract entry.
D) the profits that they do earn will only cover variable costs.

Question

Quizplus · Accepted Answer

Competitive firms operate in a market environment where there are many other firms producing the same/similar products. In this environment, firms have little or no control over the market price and are considered price takers. Therefore, to survive and stay competitive in the long run, firms must maximize profits by producing the output level where marginal cost equals marginal revenue. Firms that are not profit maximizers will either earn lower profits or incur losses, making it difficult for them to survive in the market. Thus, maximizing profit is essential for the survival of competitive firms.

In the Long Run,competitive Firms MUST Be Profit Maximizers Because