In the short run, a purely competitive firm that seeks to maximize profit will produce
A)where the demand and the ATC curves intersect.
B)where total revenue exceeds total cost by the maximum amount.
C)that output at which economic profits are zero.
D)at any point where the total revenue and total cost curves intersect.

Question

Quizplus · Accepted Answer

A purely competitive firm seeking to maximize profit will produce where the difference between total revenue and total cost is the greatest, which is choice B. This point maximizes profit because it is where the firm's marginal cost equals its marginal revenue, a fundamental condition for profit maximization in the short run for competitive markets. Choices A, C, and D do not accurately describe the profit-maximizing condition.

In the Short Run, a Purely Competitive Firm That Seeks