Question

A firm in a perfectly competitive market will choose q' such that price is equal to MC AFC O AC AVC Cannot be determined from the information

Answer 1

Answer- MC

Considering that q* is the quantity at which profit is maximized.

As we know in perfect competition, profit is maximized at MR = MC.

In perfect competition, all the firms sell the product at market price(P).

Total Revenue(TR) = P*Q

d(TR) dQ) MR = P

And for profit maximizing - MR = MC

So, MR = P = MC

So when P =MC , q=q* and at this quantity profit is maximized.