Profits of a price taking firm
Not what you're looking for? Search our solutions OR ask your own Custom question.
Why are the profits of a price taking firm maximized when it produces a level of output where price is equal to marginal cost?
© BrainMass Inc. brainmass.com March 6, 2023, 2:36 pm ad1c9bdddfhttps://brainmass.com/economics/output-and-costs/profits-price-taking-firm-96486
Solution Preview
Comparing total cost and total revenue is one way to find the profit-maximizing rate of output. A second and more revealing way is to use marginal revenue and marginal cost. Marginal revenue is the change in total revenue divided by the change in ...
Solution Summary
This solution is comprised of a detailed explanation to answer why are the profits of a price taking firm maximized when it produces a level of output where price is equal to marginal cost.
$2.49