Firms that supply a good in a perfectly competitive product market will produce more of the good than is efficient.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms will produce at the efficient level of output where marginal cost equals marginal revenue. Producing any more or less than this level would result in lower profits for the firm. Therefore, firms will not overproduce and will produce at the socially efficient level of output.

Firms That Supply a Good in a Perfectly Competitive Product