To maximise profit, a perfectly competitive firm
A)should sell the quantity of output determined by the interaction between industry demand and supply.
B)should sell the quantity of output that results in a value for total revenue that is equal to total cost.
C)should produce the quantity of output that results in the greatest difference between total revenue and total cost.
D)should produce the quantity of output that results in the greatest difference between marginal revenue and marginal cost.

Question

Quizplus · Accepted Answer

A perfectly competitive firm maximizes profit by producing the quantity of output that results in the greatest difference between total revenue and total cost. This is because profit is maximized when the gap between what the firm earns (total revenue) and what it spends (total cost) is the largest.

To Maximise Profit, a Perfectly Competitive Firm