In the short run,the profit-maximizing behaviour for a price-taking firm requires it to operate where
A)P = MC,given that P is greater than or equal to ATC.
B)P = TR = TC.
C)P MR MC.
D)AVC = AR.
E)P = MC,given that P is greater than or equal to AVC.

Question

In the short run,the profit-maximizing behaviour for a price-taking firm requires it to operate where
A)P = MC,given that P is greater than or equal to ATC.
B)P = TR = TC.
C)P > MR > MC.
D)AVC = AR.
E)P = MC,given that P is greater than or equal to AVC.

Quizplus · Accepted Answer

In the short run, a price-taking firm maximizes profit by producing where price (P) equals marginal cost (MC), as long as the price is greater than or equal to average variable cost (AVC). This ensures the firm covers its variable costs and contributes to fixed costs.

In the Short Run,the Profit-Maximizing Behaviour for a Price-Taking Firm