When is a competitive firm's profits maximized?

Question

Quizplus · Accepted Answer

A competitive firm's profits are maximized when the marginal revenue earned from selling an additional unit (MR) is equal to the marginal cost of producing that unit (MC), because this is the point where the firm adds the most to its total profits. At any point where MR is greater than MC, the firm can increase profits by producing more. At any point where MR is less than MC, the firm can increase profits by reducing production. Therefore, the best choice is B, as it represents the point at which the firm can maximize profits.

When Is a Competitive Firm's Profits Maximized