Figure 12-6 Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples.
-A perfectly competitive firm will maximize its profit at the rate of output where the vertical distance between its total revenue and total cost is the largest. This is the same rate of output where

Question

Figure 12-6  Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples.
-A perfectly competitive firm will maximize its profit at the rate of output where the vertical distance between its total revenue and total cost is the largest. This is the same rate of output where

Quizplus · Accepted Answer

A perfectly competitive firm will maximize its profit where marginal revenue equals marginal cost. This is because selling one more unit at that rate of output will add exactly the same amount to revenue as it adds to cost.

Figure 12-6 Figure 12-6 Shows the Demand, Marginal Cost