For a perfectly competitive firm,profit is maximized at the output level where
i.total revenue exceeds total cost by the largest amount.
ii.marginal revenue equals marginal cost.
iii.price equals marginal cost.
A) i only
B) ii only
C) ii and iii
D) i and ii
E) i, ii, and iii

Question

Quizplus · Accepted Answer

In a perfectly competitive market, profit is maximized when total revenue exceeds total cost by the largest amount, which occurs at the output level where marginal revenue equals marginal cost. Since price equals marginal revenue in a perfectly competitive market, this also means that price equals marginal cost at the profit-maximizing output level. Therefore, all three statements are correct.

For a Perfectly Competitive Firm,profit Is Maximized at the Output