|
Title: A perfectly competitive firm maximizes profits (or minimize losses) when it produces the ... Post by: david101 on Jul 14, 2018 A perfectly competitive firm maximizes profits (or minimize losses) when it produces the quantity where marginal revenue equals marginal cost and the price is:
A. greater than average fixed cost. B. greater than average total cost. C. greater than marginal cost. D. greater than average variable cost. Title: Re: A perfectly competitive firm maximizes profits (or minimize losses) when it produces the ... Post by: Olivia foy on Jul 14, 2018 https://biology-forums.com/index.php?topic=1681281.0
Does this help? A perfectly competitive firm maximizes its profit when it produce that level of output at which marginal revenue equals marginal cost. Since, a perfectly competitive firm is a price taker, its marginal revenue is always equal to price. So, at profit-maximizing level of output, price always equals marginal cost for a perfectly competitive firm. However, price shold be greater than variable cost other wise firm will shut down or would not operate in short-run. Price can be less than average total cost in the short-run, provided it is greater than average variable cost. In such scenario firm will operate. Hence, the correct answer is option (D). |