In order to maximize profits, a firm that can sell all it wants without affecting price should produce Select one:

a. where average variable costs are minimized.

b. where marginal cost is equal to average variable costs.

c. where marginal cost is equal to price.

d. where marginal cost is a minimum.

Solutions

Expert Solution

A perfectly competitive firm sells all its units of output at the constant price, which they take from the market. The price is determined by the market forces.

A perfectly comptetitive firm in order to maximize profit, produces at the point where marginal cost is equal to price.

Answer: Option (C)

Rahul Sunny answered 2 years ago

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