<p>This is somewhat unrealistic, but so be it...</p>
<p>If <span class="math-container">$p=MC$</span>, then for each additional unit you get as much as you pay, therefore your profit is constant in quantity, either 0 or negative (because of fixed costs). In the latter case you would exit the market in the long run, but in the short run your profit maximization problem is indeterminate (every quantity is optimal). In the former case your profit maximization problem is indeterminate in the short and in the long run.</p>
<p>If <span class="math-container">$p&lt;MC$</span>, then you would shut down to minimize your loss.</p>
<p>If <span class="math-container">$p&gt;MC$</span>, then your profit maximization problem has no solution in the real numbers. (You want to produce an &quot;infinite quantity&quot;.)</p>

CC BY-SA 4.0
2021-03-17T00:00:21.423Z
2021-03-17T00:00:21.423Z
VARulle
<p>What happens if the demand curve is flat because the firm is a price-taker in the market, but the firm has a constant marginal cost. If the equations are the same I assume the price would be set with a theoretically infinite quantity, but what happens if they are different?</p>

CC BY-SA 4.0
2021-03-15T17:07:49.920Z
If the market price is below marginal cost at any quantity, the firm does nothing and leaves the market.  If the market price is above marginal cost, the firm keeps selling more until demand drops or marginal cost increases.
Henry
<microeconomics><supply-and-demand><nonexpert>
Constant marginal cost for a firm and perfect competition
Kajsa
# Constant marginal cost for a firm and perfect competition

(Asked by: username_0 on 2021-03-15)

What happens if the demand curve is flat because the firm is a price-taker in the market, but the firm has a constant marginal cost. If the equations are the same I assume the price would be set with a theoretically infinite quantity, but what happens if they are different?

**Tags:** microeconomics, supply-and-demand, nonexpert

> **Comments:**
> **username_1**: If the market price is below marginal cost at any quantity, the firm does nothing and leaves the market.  If the market price is above marginal cost, the firm keeps selling more until demand drops or marginal cost increases.  

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## 1 answers

### Answer by username_2 on 2021-03-17. Score: 1

This is somewhat unrealistic, but so be it...

If $p=MC$, then for each additional unit you get as much as you pay, therefore your profit is constant in quantity, either 0 or negative (because of fixed costs). In the latter case you would exit the market in the long run, but in the short run your profit maximization problem is indeterminate (every quantity is optimal). In the former case your profit maximization problem is indeterminate in the short and in the long run.

If $p<MC$, then you would shut down to minimize your loss.

If $p>MC$, then your profit maximization problem has no solution in the real numbers. (You want to produce an "infinite quantity".)


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