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

In a perfectly competitive market, a firm maximizes its profit by producing the quantity of output where marginal cost (MC) equals marginal revenue (MR). Marginal cost is the cost of producing one additional unit of a good, while marginal revenue is the income earned from selling that additional unit. When a firm produces at the point where MC equals MR, it ensures that the cost of making one more unit is exactly covered by the revenue it generates from selling that unit. For example, if a bakery finds that making one more loaf of bread costs $2 (MC) and it can sell that loaf for $2 (MR), it will continue to produce that loaf because it does not lose money. If the bakery produced more loaves where MC is higher than MR, it would start losing money on those extra loaves, reducing overall profit.