If a perfectly competitive firm wanted to maximize its total revenues,it would produce:

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the firm is a price taker and cannot influence the market price. Therefore, the only way for the firm to maximize its total revenue is to produce at the level where its marginal revenue equals the market price. This occurs at the level of output where the marginal cost equals the market price. However, this level of output may not be the most profitable as the firm may incur losses due to high fixed costs. Thus, the firm will produce at the level where its total revenue is the highest, which is equivalent to producing as much output as it is capable of producing.

If a Perfectly Competitive Firm Wanted to Maximize Its Total