If firms are competitive and profit maximizing, the price of a good equals the
A)marginal cost of production.
B)fixed cost of production.
C)total cost of production.
D)average total cost of production.

Question

Quizplus · Accepted Answer

If firms are competitive and profit maximizing, they will produce up to the point where marginal cost equals marginal revenue. In the long run, this leads to firms charging a price equal to their marginal cost of production, as they cannot sustainably charge a higher price without risking losing customers to competitors who charge a lower price.

If Firms Are Competitive and Profit Maximizing, the Price of a Good