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    "People always behave in a selfish manner to maximise their financial well being"

    Is this statement true for perfect competition? Since perfect competition have many firms producing a homogeneous product and producing at P = MC. I am a little bit confused about perfect competition and a little clarification will help, thanks in advance!
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    (Original post by iamrue)
    "People always behave in a selfish manner to maximise their financial well being"

    Is this statement true for perfect competition? Since perfect competition have many firms producing a homogeneous product and producing at P = MC. I am a little bit confused about perfect competition and a little clarification will help, thanks in advance!
    Hey! So in perfect competition, we assume that producers want to profit maximise.

    That doesn't have to mean they are selfish, you could maximise your business' profits but then be very generous (not selfish) with your family, for example.

    But anyway, the profit maximise.

    And what's the condition for profit maximisation?

    MC = MR

    But remember in Perfect Competition, firms accept the market price = P. Every good they sell, they can sell for P.

    So for the first unit, they get revenue = P, for the second they also get P, so their marginal revenue is = P, in other words MR = P.

    So if they're profit maximising: MC = MR

    Andddd MR = P

    Then MC = P

    I'm not sure if that was your question! But I'm happy to explain anything you want more clearly - just let me know
 
 
 

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