Quiz: Quiz 10 138695/quizzes/1913882/take/questions/43641260 ?TripAdvisor 17 Qui

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Quiz: Quiz 10 138695/quizzes/1913882/take/questions/43641260 ?TripAdvisor 17 Quizzes Quiz 10- Perfect Competition Quiz 10- Perfect Competition Started: Jul 22 at 10:33am Quiz Instructions D Question 5 1.11 pts Firms in perfectly competitive industries maximize their short-run profits by producing at the level of output at which O average total cost is at a minimum O average total cost is equal to the market price O marginal cost is equal to the market price O average variable cost is at its minimum

Explanation / Answer

Answer: (c) marginal cost is equal to the market price.

Every industry produces till the point where its marginal revenue equals its marignal cost to maximize profit. However, in a perfectly competitive industry, marginal revenue and the market price are one and the same thing. Thus, to maximize profits, a perfectly competitive industry equates marignal cost to market price.

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