For a perfectly competitive firm, as the quantity of output increases, the total revenue

should increase steadily at a rate which will depend on the given market price. Profits
will reach an all-time high or losses will be minimised for a perfectly competitive firm at
the quantity where either total revenue exceeds cost of production by maximum or total
revenue falls short of costs by the smallest amount.

So, the decision to make here is the quantity that a firm should produce. Let us observe this
using profit.

Profit = Total revenue - Total Cost

Profit=(Price) (Quantity produced) − (Average cost) (Quantity produced)

Because the firm is using the price for its output as decided by demand and supply in the
market, it cannot select the price it charges. Thus, price is already obtained from the profit
formula, so any number of units can be sold using that price 

This indicated perfectly elastic demand for its products which means buyers are willing to
buy as any number of units at market price. Therefore, the price and the quantity chosen by
the firm will decide the costs, revenue and in turn the profit.

So, the aim here is to maximise product by selling industrial chemicals. If the number of units
are increased, revenue will increase, if price increases with every unit sold, then total revenue
will also increase. As an example, to see how much quantity I will produce let's take 100ml
of chemicals sold at $4 per bottle. One bottle will fetch $4, 2 will be $8, so on and so forth. If
due to some reason chemical prices double to $8 per bottle then revenue for 2 bottles will
also double.

         
The graph for the same is given above. The horizontal axis of the graph shows the
quantity of chemicals produced in bottles; the vertical axis shows both total revenue and total
costs, measured in dollars. The total cost curve meets the vertical axis at a point that displays
the range of fixed costs, and then moves upward.

Based on its revenue and cost curves, a competitive firm like the chemical company can
decide the quantity of output that will result in maximum profit.
At any quantity, total revenue minus total cost will equal profit. One way to find out the
quantity that gives maximum profit is to see at what quantity total revenue exceeds total cost
by the maximum amount. In the graph above, the space between cost and revenue depicts
either profit—if revenues are greater than total costs at a particular quantity—or losses—if
costs are more than revenues at a particular quantity.
In this example, total costs will be greater than total revenues at output levels from 0 to 40, so
in this range, it will lead to losses. At output levels from 50 to 80, total revenues are greater
than total costs, so the firm will make profits. However, with an output of 90 or 100, costs
will exceed total revenues and the firm will suffer losses.

A higher price leads to a total revenue that would be higher for every quantity sold. A lower
price would lead to a total revenue that would be lower for every quantity sold. What would
happen if the price decreased low enough so that the total revenue line is completely under
the total cost curve—in other words, total costs were higher than total revenues at every level
of output? In that situation, the firm will have no option but to suffer losses. But a firm with
an intention of profit maximisation will prefer a quantity of output where total revenues is as
close to total costs as possible in order to suffer minimum loss.

Thus, depending on the prices and quantities, I will choose the ideal amount of output which
depends on the market price to provide maximum profit.