At the profit-maximising level of output for a perfectly competitive firm,
A)price equals marginal cost.
B)average revenue equals average variable cost, and price equals marginal cost.
C)marginal revenue equals marginal cost, and average total cost equals average fixed cost.
D)price equals average revenue, and marginal cost equals average variable cost.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm is price taker, meaning it cannot influence the market price. Therefore, to maximize profit, the firm produces where marginal cost equals marginal revenue. However, in a perfectly competitive market, marginal revenue is equal to the market price. Thus, the firm produces where price equals marginal cost.

At the Profit-Maximising Level of Output for a Perfectly Competitive