Answer
price (P)
marginal cost (MC)
marginal revenue (MR)
Work Step by Step
For a perfectly competitive firm, marginal revenue equals price, and to maximize profit, the firm produces the quantity at which marginal cost equals marginal revenue.
In perfect competition, MR = P because the firm is a price taker.
Profit is maximized when MR = MC, ensuring the cost of producing one more unit equals the revenue it generates.
