In the short run, a perfectly competitive firm will maximize profit by producing where:

Question

Quizplus · Accepted Answer

In the short run, a perfectly competitive firm will maximize profit by producing where marginal cost (MC) equals marginal revenue (MR). This is because MR represents the additional revenue a firm earns by producing one more unit of output, and MC represents the additional cost of producing one more unit of output. At the point where MC equals MR, the firm is producing the optimal amount of output where the additional cost of producing one more unit is equal to the additional revenue earned from selling one more unit, resulting in maximum profit.

In the Short Run, a Perfectly Competitive Firm Will Maximize