Perfectly competitive firms produce at the quantity where marginal revenue equals marginal cost, which is the level of output that maximizes their profits. At this point, firms are producing efficiently and are able to sell their goods at the market price, which is also their marginal revenue. In a perfectly competitive market, firms are price takers and cannot influence the market price, so they adjust their production to match the market demand. This means that all firms in the market are producing the same product and are competing with each other based on price and quality. Therefore, in a perfectly competitive market, firms strive to minimize their costs and maximize their output to stay competitive and profitable.