The optimum level of output for a business is where
option's
1)Profit is maximized
2)Revenye is maximized
3)Merginal cost is minimized
4)Average cost is minimized
Answers
Answer:
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Explanation:
An optimal price can be defined as the price at which the seller can make the highest profit possible, that is, the seller’s price is maximized. The rule of marginal output postulates that profit is maximized by producing an output, whereby, the marginal cost (MC) of the last unit produced is exactly equal to the marginal revenue (MR). Simply put, MC=MR.
Optimal Price and Output in Perfectly Competitive Markets
Under perfect competition, there are many firms in the market. If one firm decides to increase production, the market equilibrium price would not be highly affected. Conversely, if a single firm is able to change the market price at equilibrium, then the market would not be in perfect competition. Therefore, each firm faces a demand curve that is horizontal at equilibrium.
In perfect competition, any profit-maximizing producer has a market price that is equal to its marginal cost (P=MC).