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# Marginal Analysis: Perfectly Competitive Firm

Important Problem related to TCO C,

How about if we try an EXAMPLE of MR=MC for a perfectly competitive firm?

(TCO C ) Answer the next question on the basis of the following information for a purely competitive firm:

Output------------Price------------Total Cost

----0--------------\$100---------------\$100
----1--------------\$100---------------\$260
----2--------------\$100---------------\$290
----3--------------\$100---------------\$350
----4--------------\$100---------------\$480
----5--------------\$100---------------\$700

How many units would the above profit-maximizing firm produce?

#### Solution Preview

Hello Student,

In a perfectively competitive firm, profit is usually maximized at the point where Marginal Cost (MC) = Marginal Revenue (MR). You know that marginal cost by definition is the additional cost that is incurred by a firm to produce one additional unit of a product (or output). Marginal Revenue, on the other hand, is the additional revenue ...

#### Solution Summary

This solution provides you with step by step explanation of how to calculate the profit maximizing output of a perfectly competitive firm. Note, an excel spreadsheet is attached to the solution with calculations.

\$2.19