Which of the following is true at the level of output at which a competitive firm maximizes profit?
A)price = marginal cost
B)price = wage/value of marginal product of labor
C)price = marginal product of labor/wage
D)All of the above are correct.

Question

Quizplus · Accepted Answer

At the level of output where a competitive firm maximizes profit, price equals marginal cost. This is because if price is greater than marginal cost, the firm can increase profit by producing more. On the other hand, if price is less than marginal cost, the firm can increase profit by reducing production. Therefore, the profit-maximizing level of output occurs where price and marginal cost are equal. Options B and C are not relevant in this context as they relate to the determination of wages rather than the level of output that maximizes a firm's profit.

Which of the Following Is True at the Level of Output