Scenario 9.2
Consider a publicly held firm (one whose stock shares are traded on the stock exchange) that earned revenue worth $350 million and incurred land, labor, and debt costs worth $320 million. The stockholders who have invested a total of $100 million in this firm could have earned 10 percent return on other comparable investments.
-A perfectly competitive firm maximizes profit when:

Question

Quizplus · Accepted Answer

A perfectly competitive firm maximizes profit at the point where its marginal revenue (MR) is equal to its marginal cost (MC) because any deviation from this point will result in either lower profit or losses. In this scenario, we do not have enough information to determine the firm's marginal revenue or marginal cost, but we know that the firm earned revenue worth $350 million and incurred costs worth $320 million, which means its profit is $30 million. To maximize this profit, the firm should continue producing at the point where its marginal revenue equals its marginal cost.

Scenario 9.2 Consider a Publicly Held Firm (One Whose Stock Shares Are