Which of the following conditions hold true for both the perfectly competitive firm and the monopoly at the profit-maximizing output level?
A) MR = P
B) MC = ATC
C) MC = P
D) MR = MC

Question

Quizplus · Accepted Answer

Both perfectly competitive firms and monopolies maximize profits by producing the output level where marginal revenue (MR) equals marginal cost (MC). This condition ensures that producing an additional unit of output will bring in the same additional revenue as it costs to produce, leading to the maximum possible profit. Therefore, the correct choice is D, where both firms have MR = MC at the profit-maximizing output level. Choices A and C only hold true for the perfectly competitive firm, while choice B only holds true for the monopoly.

Which of the Following Conditions Hold True for Both the Perfectly