A firm is currently producing 100 hair dryers and sells them in a perfectly competitive market at a price of $12 each.The marginal cost of producing the 100^th hair dryer is $13 and the marginal cost of producing the 101^st hair dryer is $14.To maximize profit,the firm should produce:

Question

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In a perfectly competitive market, a firm maximizes profit by producing where marginal cost equals marginal revenue (price). Since the marginal cost of the 100th hair dryer ($13) is greater than the price ($12), the firm should produce fewer than 100 hair dryers to maximize profit.

A Firm Is Currently Producing 100 Hair Dryers and Sells