A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing)output by equating
A)price and average total cost.
B)price and average fixed cost.
C)marginal revenue and marginal cost.
D)price and marginal revenue.

Question

Quizplus · Accepted Answer

Marginal revenue and marginal cost are equated to determine the profit-maximizing or loss-minimizing output for a competitive firm in the short run. This principle applies because when the cost of producing one more unit (marginal cost) equals the revenue gained from selling that unit (marginal revenue), profit is maximized.

A Competitive Firm in the Short Run Can Determine the Profit-Maximizing