A wheat farmer sells wheat to a grain broker Chicago. Since the market for wheat is generally considered to be competitive, the wheat farmer maximizes his profit by choosing

A) to produce the quantity at which average variable cost is minimized.
B) to produce the quantity at which average fixed cost is minimized.
C) to sell its wheat at a price where marginal cost is equal to average total cost.
D) the quantity at which the farm's marginal cost of production is equal to the market price.

Question

Nibha Krish · Accepted Answer

Final Answer : D, Explanation :  In a competitive market, firms maximize profit by producing the quantity where marginal cost equals market price, as this is where marginal revenue equals marginal cost.

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