If a purely competitive firm is maximizing economic profit,
A) it is necessarily maximizing per-unit profit.
B) it may or may not be maximizing per-unit profit.
C) then per-unit profit will be minimized.
D) it is necessarily overallocating resources to its product.

Question

Quizplus · Accepted Answer

A purely competitive firm is a price taker, meaning it has no control over the market price. Therefore, it can only maximize economic profit by producing the quantity where marginal cost equals marginal revenue. This may or may not be the same quantity that maximizes per-unit profit.

If a Purely Competitive Firm Is Maximizing Economic Profit