In a perfectly competitive market, profit will be maximum where the gap between the Total Revenue (TR) curve and Total Cost (TC) curve is maximum.

Here's why:

1. Total Revenue (TR) is the total income a firm receives from selling its product. It's calculated by multiplying the price of the product by the quantity sold.

2. Total Cost (TC) is the total expense the firm incurs in producing and selling its product. It includes both fixed costs (costs that don't change with the level of output) and variable costs (costs that do change with the level of output).

3. The difference between Total Revenue and Total Cost is the firm's profit.

4. Therefore, the firm's profit is maximized where the difference between the TR curve and the TC curve is greatest. This is the point where the firm is earning the most revenue while keeping its costs as low as possible.

5. If the TR curve intersects the TC curve, the firm is breaking even, not maximizing profit. If the TR curve is tangent to the TC curve, the firm is in a state of normal profit, which is not the maximum profit.

6. Hence, the correct answer is: The gap between the TR curve and TC curve is maximum.

Question

In a perfectly competitive market, profit will be maximum where the gap between the Total Revenue (TR) curve and Total Cost (TC) curve is maximum.

Here's why:

1. Total Revenue (TR) is the total income a firm receives from selling its product. It's calculated by multiplying the price of the product by the quantity sold.

2. Total Cost (TC) is the total expense the firm incurs in producing and selling its product. It includes both fixed costs (costs that don't change with the level of output) and variable costs (costs that do change with the level of output).

3. The difference between Total Revenue and Total Cost is the firm's profit.

4. Therefore, the firm's profit is maximized where the difference between the TR curve and the TC curve is greatest. This is the point where the firm is earning the most revenue while keeping its costs as low as possible.

5. If the TR curve intersects the TC curve, the firm is breaking even, not maximizing profit. If the TR curve is tangent to the TC curve, the firm is in a state of normal profit, which is not the maximum profit.

6. Hence, the correct answer is: The gap between the TR curve and TC curve is maximum.

Knowee AI · Accepted Answer

In a perfectly competitive market, profit will be maximum where the gap between the Total Revenue (TR) curve and Total Cost (TC) curve is maximum.

Here's why:

1. Total Revenue (TR) is the total income a firm receives from selling its product. It's calculated by multiplying the price of the product by the quantity sold.

2. Total Cost (TC) is the total expense the firm incurs in producing and selling its product. It includes both fixed costs (costs that don't change with the level of output) and variable costs (costs that do change with the level of output).

3. The difference between Total Revenue and Total Cost is the firm's profit.

4. Therefore, the firm's profit is maximized where the difference between the TR curve and the TC curve is greatest. This is the point where the firm is earning the most revenue while keeping its costs as low as possible.

5. If the TR curve intersects the TC curve, the firm is breaking even, not maximizing profit. If the TR curve is tangent to the TC curve, the firm is in a state of normal profit, which is not the maximum profit.

6. Hence, the correct answer is: The gap between the TR curve and TC curve is maximum.

In a perfectly competitive market, profit will be maximum where;Group of answer choicesWhere the TR curve intersects the TVC curve.Where the TR curve is tangent to the TC curve.The gap between the TR curve and TC curve is maximum.The TR curve intersects the TC curve.

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