Question

Which of the following is true about how a firm in a competitive market decides what level of output to produce in order to maximize its​ profit?A. Produce until marginal cost is furthest above average total cost.B. Produce at the point where price is equal to marginal cost.C. Produce up to the point where price equals average total cost.D. All of the above.

Answer 1

Answer:

C. Produce up to the point where price equals average total cost.

Explanation:

• A firm in a competitive market trier to reach a maximum profit and that equals to the total revenues minus the total costs and price and the goods and them have no control over changing market supply.

• The demand and are the price takers of the market and are same as compared to the supply and demand as the price. If the price is less than that of the average total cost but is greater than the average Variables cost and is when the firm incurs an economic loss.