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

In a perfectly competitive market, a firm maximizes its profit by producing the quantity of output where its marginal cost equals the market price. Marginal cost is the cost of producing one more unit of a good. When the price is equal to marginal cost, the firm is making the best decision because it means that the revenue from selling one more unit is exactly equal to the cost of producing that unit. For example, if a firm can sell an extra widget for $10, and it costs $10 to make that widget, then producing it will neither gain nor lose money, indicating that the firm is at its profit-maximizing level. If the firm produces more or less than this point, it may either lose profit or miss out on potential earnings.