171k views
3 votes
Consider a profit-maximizing firm in a competitive industry. Under which of the following situations would the firm choose to produce where MR = MC?

1) When MR > MC
2) When MR < MC
3) When MR = MC
4) Cannot be determined

User Praneet
by
7.6k points

1 Answer

5 votes

Final answer:

A perfectly competitive firm will find its profit-maximizing level of output where MR = MC, and for monopolists, this is not the case.

Step-by-step explanation:

A perfectly competitive firm will also find its profit-maximizing level of output where MR = MC. The key difference with a perfectly competitive firm is that in the case of perfect competition, marginal revenue is equal to price (MR =P), while for a monopolist, marginal revenue is not equal to the price, because changes in quantity of output affect the price.

User Liska Liskor
by
8.3k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.