If a firm's demand curve is perfectly elastic, then at the profit-maximizing level of output A) P = MR = MC. B) P MR MC. C) P

Question

If a firm's demand curve is perfectly elastic, then at the profit-maximizing level of output A) P = MR = MC. B) P > MR > MC. C) P < MR < MC. D) P > 0 and MR = 0.

Quizplus · Accepted Answer

In the case of perfectly elastic demand, the price (P) remains constant regardless of the quantity sold, meaning the marginal revenue (MR) from selling one more unit is equal to the price. For profit maximization, marginal cost (MC) must equal marginal revenue (MR), leading to P = MR = MC.

If a Firm's Demand Curve Is Perfectly Elastic, Then at the Profit-Maximizing