In a perfectly competitive market, a firm maximizes its profit by producing the quantity of output where marginal cost equals which of the following?

In a perfectly competitive market, a firm maximizes its profit by producing the quantity of output where marginal cost equals marginal revenue. Marginal cost is the cost of producing one more unit of a good, while marginal revenue is the income earned from selling one more unit. When these two are equal, it means the firm is not losing money on the last unit produced and is making the most profit possible. For example, if a bakery finds that the cost to make one more loaf of bread is $2, and selling that loaf also brings in $2, the bakery is in a good position to maximize its profit by continuing to produce. If the bakery's marginal cost were higher than marginal revenue, it would need to reduce production to avoid losses.