Question

a competitive firm maximizes its profits (or minimizes its losses) by producing the quantity where the market price equals the firms: a. marginal cost. b. average fixed cost. c. average variable cost. d. average total cost.

Explanation:

In perfect competition, a firm maximizes profit (or minimizes loss) at the output level where the market price (which equals marginal revenue for competitive firms) is equal to marginal cost. This is the core profit-maximization rule for competitive firms: producing until the additional cost of the last unit equals the additional revenue from selling it. The other cost metrics do not define this optimal output point.

Answer:

a. marginal cost.