A profit maximizing competitive firm in a market with NO externalities will produce the quantity of output where
- price = marginal cost
- marginal revenue = marginal cost
- marginal benefit = marginal cost
Option D
Explanation:
All of the options are true.
In a highly competitive market, companies set marginal incomes at marginal cost level (MR= MC) in order to make a profit. MR is the pitch of the profit curve, which represents the (D) and price (P) of the demand curve as well.
It is necessary to have positive, or negative economic benefits in the shorter term. The company profits whenever the price exceeds the total average cost. The company loses on the market if premiums are less than average total costs.