A perfect competitor's output in the short run is the quantity that:
A)sets MC equal to MR = P.
B)sets AVC = P.
C)minimizes ATC.
D)sets ATC = P.
E)none of the above are correct.

Question

Quizplus · Accepted Answer

In the short run, a perfect competitor aims to maximize profits by producing the quantity of output where marginal cost (MC) equals marginal revenue (MR). This is because at this level of output, the firm is able to sell each unit of output for the market price (P) and produce it at the lowest cost possible. Therefore, choice A is correct as it sets MC = MR = P. Choices B, C, and D are incorrect as they do not necessarily lead to profit maximization in a perfect competition market.

A Perfect Competitor's Output in the Short Run Is the Quantity