Question

What conditions must hold if a profit-maximizing firm produces positive output in a competitive market?

Answer 1

Answer:

When the prices remain fixed then the profit-maximizing firm can sell any amount of quantity of output at the market price.

Explanation:

There are three conditions required for the profit-maximizing firm producing a positive level of –output in the competitive market:-

• Marginal revenue must be equal to Marginal cost.
• Marginal cost should be rising upwards.
• The price must be greater than or equal to the average variable cost in the short run.