header bg

Scan QR code or get instant email to install app


Under which market structure is the profit maximizing strategy to produce the quantity of output for which the price is equal to marginal cost?

A Perfect competition.

Firms’ demand curves are perfectly elastic (horizontal) in a market characterized as perfect competition, so that marginal revenue is equal to price and a firm maximizes profit by producing the output quantity at which marginal cost equals price. In monopoly markets or under monopolistic competition, firm demand curves are downward sloping so that marginal revenue is less than price.

Related Information


Leave a Reply

Your email address will not be published. Required fields are marked *