Question

Discuss how a perfectly competitive firm decides how much output to produce

Short answer

These price for products as supplies there in economy can establish the firm's yearly revenue, actual costs, but, therefore, company profits.

Step-by-step solution

Introduction

As such a hypercompetitive company delivers greater produce, the overall sales climbs at quite a stable speed defined either by specified price. Profits are going to be highest—or losses are going to be smallest—for a superbly competitive firm at the number of output where total revenues exceed total costs by the best amount

Given Information

A perfectly competitive firm has only 1 major decision to make—what quantity to supply. As see why it's typically the case, examine a distinctive means of communicating that basic idea of earnings:

$\text{Profit}=\text{Total revenue}-\text{Total cost}$

$\text{Profit}=\left(\text{Price}\right)\left(\text{Quantity produced}\right)-\left(\text{Average cost) (Quantity produced}\right)$

Explanation

That indicates that its agency's products has had a marvelously fluid price elasticity, the clients prepared to charge the same price for some amount of units of produce.