In a perfectly competitive market, if a firm is producing at a level where marginal revenue is greater than marginal cost, it indicates that the firm is maximizing its profit.

In a perfectly competitive market, firms aim to maximize their profits by adjusting their production levels. When a firm finds that its marginal revenue, which is the additional income from selling one more unit, is greater than its marginal cost, which is the cost of producing that extra unit, it means the firm can increase its profit by producing more. This is because the firm is still earning more from selling that extra unit than it spends to make it. For example, if a firm sells one more unit of a product for $10 (marginal revenue) but it costs them only $7 to produce it (marginal cost), they gain an extra $3 in profit. Therefore, as long as marginal revenue exceeds marginal cost, the firm should continue increasing production until these two values equal each other to reach the maximum profit point.