← A Level Economics Revision · All Perfect competition (short-run profit) questions · Home

A-Level Economics · Perfect competition (short-run profit) diagram question

Which point is the firm's profit-maximising output in the SHORT RUN?

▶ Try it in the game first

The diagram

The answer

Point B. MC cuts AR = MR at B: output 7. Same rule as every other market structure — MC = MR. Profit-max is always MC = MR. Because the firm is a price taker, MR is the flat £7 line, so the rule becomes MC = price — point B, output 7. At M the firm is producing too little: MC is below MR, so expanding still adds profit.

Test yourself properly

This is one of 6 questions on the perfect competition (short-run profit) diagram — every corner lettered, every wrong answer diagnosed.

▶ Play the perfect competition (short-run profit) game All questions & answers

George Chantry
Professional A-Level Economics tutor · Oxford PPE First, 3 prizes in economics · 7,000+ hours one-to-one