Why does a firm in perfect competition produce the quantity at which marginal cost equals price?
What will be an ideal response?
A firm's total profit is maximized by producing the level of output at which marginal revenue for the last unit produced equals its marginal cost, or MR = MC. In a perfectly competitive market, MR is equal to the market price P for all levels of output. These points imply that a perfectly competitive firm will maximize profit by producing the quantity at P = MC.
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The export supply curve is the portion of the domestic supply curve below the no-trade equilibrium price
a. True b. False Indicate whether the statement is true or false
In Figure 12.6, airline Fly Smart is initially a secure monopoly between two cities X and Y at point M, serving 300 passengers per day at the profit maximizing price of $300 per ticket. Suppose that Fly Smart discovers that a second airline is contemplating entering the market. If the minimum market entry quantity is 130 passengers per day, what price should Smart Fly charge to secure the entry-deterring quantity?
A. $300 B. $220 C. $180 D. $100