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Consider a perfectly competitive market with equilibrium price $P_{eq}$ and quantity $Q_{eq}$ and firm with profit maximising quantity $Q_f$ as illustrated below:

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I guess any firm in the market would have the same demand, marginal revenue and average revenue (or am I wrong?), but what about profit maximising quantity $Q_f$? It seems to depend on $MC$. Is $MC$ different for each firm?

  1. If so, then $Q_f$ is not necessarily the same for each firm?

  2. If not, why?

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  • $\begingroup$ This part: "any firm in the market would have the same demand" is not clear to me. The industry faces demand, not individual firms. $\endgroup$
    – Giskard
    Aug 11, 2016 at 14:46
  • $\begingroup$ @denesp The MR for each firm is equal to the equilibrium price determined by the market right? $\endgroup$
    – BCLC
    Aug 12, 2016 at 3:29
  • $\begingroup$ In a competitive market? Yes. I don't see what this has to do with demand though. $\endgroup$
    – Giskard
    Aug 12, 2016 at 7:59

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In intro micro you usually assume that every firm in a perfectly competetive market has the same costs and production function etc. Hence, the MCs are the same for every firm. Under this assumptions, every firm will produce the same quantity in equilibrium.

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