Final answer:
A price-taking firm maximizes its profits by producing at the quantity where the market price equals the marginal cost (P = MC).
Step-by-step explanation:
The question asks at which point a price-taking firm maximizes its profits. According to the principles of microeconomics, a perfectly competitive firm maximizes profits by producing the quantity of output where the price (P) equals the marginal cost (MC).
It's essentially where the additional revenue from selling one more unit (marginal revenue, MR) is equal to the additional cost of producing that one more unit (marginal cost, MC). Since a perfectly competitive firm is a price taker, its marginal revenue is equal to the market price. Thus, the firm maximizes its profits by producing where P = MC. This is reflected in the profit-maximizing rule for perfectly competitive firms, recommending production at the quantity of output where P = MC.