Under perfect competition, any profit-maximizing producer faces a market price equal to its?

Business

1 answer:

KATRIN_1 [288]2 years ago

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Under perfect competition, any profit-maximizing producer faces a market price equal to its Marginal cost.

A perfect competition, often referred to as an atomistic market, is defined by various idealizing criteria, which are together referred to as perfect competition, or atomistic competition, in economics, specifically general equilibrium theory.

Any business that seeks to maximize its profits must contend with a market price (P = MC) that is equal to its marginal cost. This suggests that the price of a factor is equal to its marginal revenue product. It enables the supply curve, on which the neoclassical approach is based, to be derived. A monopoly does not have a supply curve for the same reason. Except in very limited circumstances like monopolistic competition, the abandoning of price taking makes it extremely difficult to demonstrate an universal equilibrium.

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