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When P=MC=MR , a firm in perfectly competitive market: Maximizes it's profit. Minimizes its cost of...

When P=MC=MR , a firm in perfectly competitive market:

Maximizes it's profit.

Minimizes its cost of operation.

Reaches break even.

Reaches shutdown point
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Answer #1

The correct answer is 'Option A'.

When the price is equal to the marginal cost and mmarginal revenue both then the perfectly competitive firm maximizes the profit. The perfectly competitive firm maximizes the profit at this point because there are many sellers selling homogeneous products in the market and the firm will incur loss if it deviates from this price. So, it maximizes the profit by producing at this point. Therefore, the correct answer is 'Option A'.

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