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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


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.