Question

In perfect​ competition, a firm maximizes its economic profit if it produces the output at which​ _______. A. economic profit equals zero in the short run B. market price equals marginal revenue C. marginal cost equals market price D. total revenue equals total cost

Answer 1

The answer is C.

In a perfect competition market, profit maximization is only achieved when a firm produces output level resulting to its marginal cost equals market price, that is P=MC.

Step-by-step explanation:

A firm's profit will not be maximized until its marginal revenue to product an additional unit of product equals its marginal costs, that is MR = MC.

Theoretically, in a perfect competitive market, marginal revenue equals to the market's price at all level of outputs that is MR = P.

Thus, a firm maximizes its economic profit when it has its output resulting in marginal cost equals market price, which is also equals to its marginal revenue, that is P = MC = MR.