For a perfectly competitive firm,

Question

Quizplus · Accepted Answer

In a perfectly competitive market, all firms are price takers, meaning they have no ability to influence the market price. Therefore, they can only sell their output at the market price, which means that the price at which they sell their goods is the same as the marginal revenue they receive for each additional unit sold. In other words, the marginal revenue curve for perfectly competitive firms is a horizontal straight line at the market price, which intersects the marginal cost curve at the profit-maximizing level of output. Therefore, in the short run, a perfectly competitive firm maximizes profit by producing the level of output where marginal cost equals price (and marginal revenue). Consequently, the answer is C.

For a Perfectly Competitive Firm