At what point does the profit-maximizing perfectly competitive firm produce?
A) where total revenue minus marginal revenue is at a maximum.
B) where marginal revenue minus marginal cost is at a maximum.
C) where total revenue minus total cost is at a minimum
D) where marginal revenue minus marginal cost is at a maximum
E) where marginal revenue is equal to marginal cost

Question

Quizplus · Accepted Answer

The profit-maximizing perfectly competitive firm produces at the point where marginal revenue (MR) is equal to marginal cost (MC), as this is the point where additional units of production bring in the same amount of revenue as they cost to produce. At this point, the firm is not making any additional profit or loss from producing more or less output. Therefore, the answer is E, where marginal revenue is equal to marginal cost.

At What Point Does the Profit-Maximizing Perfectly Competitive Firm Produce