Which of the following is true for a profit-maximizing firm in a competitive market?
A)Marginal cost is greater than marginal revenue and price.
B)Marginal cost is greater than marginal revenue but less than price.
C)Marginal cost is less than marginal revenue but higher than price.
D)Marginal cost equals price but is less than marginal revenue.
E)Marginal cost equals marginal revenue and price.

Question

Quizplus · Accepted Answer

In a competitive market, a profit-maximizing firm will produce up to the point where marginal cost (MC) equals marginal revenue (MR), which also equals the price of the product due to the nature of competitive markets where firms are price takers.

Which of the Following Is True for a Profit-Maximizing Firm