The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7

-The profit of a perfectly competitive firm is maximized at a level of output where its marginal cost is rising.

Question

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
 
-The profit of a perfectly competitive firm is maximized at a level of output where its marginal cost is rising.

Quizplus · Accepted Answer

In a perfectly competitive market, a firm maximizes its profit by producing the level of output where its marginal cost is equal to the market price. Since the marginal cost curve is upward sloping, the profit is maximized at the level of output where the marginal cost is rising. Therefore, the statement is true.

The Figure Given Below Shows the Aggregate Demand and Supply