[amp_mcq option1=”AC = MC when MC is lowest” option2=”MC = AR = MR when MC is lowest” option3=”MR = MC” option4=”AR = MR = AC = MC” correct=”option3″]<\/p>\n
The correct answer is: C. MR = MC<\/strong><\/p>\n In a perfectly competitive market, firms are price-takers, meaning that they cannot influence the market price of their product. As a result, the firm’s marginal revenue (MR) curve is equal to the market price (P). The firm’s marginal cost (MC) curve intersects the MR curve at the point where the firm maximizes profits. At this point, the firm is producing at the level of output where MC = MR.<\/p>\n Option A is incorrect because AC = MC when MC is lowest does not necessarily mean that the firm is maximizing profits. In order to maximize profits, the firm must produce at the level of output where MR = MC.<\/p>\n Option B is incorrect because MC = AR = MR when MC is lowest does not necessarily mean that the firm is maximizing profits. In order to maximize profits, the firm must produce at the level of output where MR = MC.<\/p>\n Option D is incorrect because AR = MR = AC = MC does not necessarily mean that the firm is maximizing profits. In order to maximize profits, the firm must produce at the level of output where MR = MC.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”AC = MC when MC is lowest” option2=”MC = AR = MR when MC is lowest” option3=”MR = MC” option4=”AR = MR = AC = MC” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-57840","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n