If a firm in perfect competition were interested in increasing its profit, it would:
A) lower its price in order to increase sales.
B) cut back production until the marginal cost of extra output is equal to the price of the product.
C) spend more money on advertising.
D) increase production until economies of scale have been reached and average total cost is at its lowest level.

Question

Quizplus · Accepted Answer

In perfect competition, firms maximize profit by producing where marginal cost equals price, as price equals marginal revenue in this market structure.

If a Firm in Perfect Competition Were Interested in Increasing