Question

Garcia company is a perfectly competitive firm. the market price of its output is $10. the firm is currently producing 100 units of output. at this level of output, the firm’s average total cost is $8 per unit, its average variable cost is $6 per unit, and its marginal cost is $10 per unit. what is the firm’s profit?

Answer 1

Answer: $200.
Any firm (regardless of market structure) will maximize profit by producing and selling the quantity at which marginal revenue is equal to marginal cost.In the special case of a perfectly competitive firm,marginal revenue is equal to price.