when a competitive firm maximizes short-run economic profits, it produces at the output level where

When a perfectly competitive firm maximizes short‑run economic profit, it produces the output level where marginal cost equals marginal revenue , and since the firm is a price taker, marginal revenue equals the market price:

Profit is maximized where MC=MR=P.\text{Profit is maximized where }MC=MR=P.Profit is maximized where MC=MR=P.

In addition, for the firm to be earning positive (economic) profit at that output, the market price must be greater than average total cost at that same quantity, so P>ATCP>ATCP>ATC at the profit‑maximizing output.