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2 months ago
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.
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wrote...
2 months ago
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).
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