In the short run,a purely competitive firm that seeks to maximize profit will produce:

A) where the demand and the ATC curves intersect.
B) where total revenue exceeds total cost by the maximum amount.
C) that output at which economic profits are zero.
D) at any point where the total revenue and total cost curves intersect.

Question

David Lorimer · Accepted Answer

Final Answer : B, Explanation :  In the short run, a purely competitive firm aiming to maximize profit will produce at the output level where the difference between total revenue and total cost is the greatest, which is choice B. This is because profit maximization occurs where marginal cost equals marginal revenue, leading to the maximum possible profit. Choices A, C, and D do not accurately describe the profit maximization condition for a competitive firm.

Definitions

Learning Objectives

Learning Objectives

Related questions