Answer to Question #242419 in Macroeconomics for Dolly C

Question

Explain three possible profit maximizing positions of perfectly competitive firms in the short run for 15 marks

Answer 1

In short run, a firm maximize its profit by choosing an output at which marginal cost is equal to marginal revenue.

In short run, a firm maximize its profit when price is greater than average total cost, the firm is making a profit.

In short run, a firm maximize its profit when price is equal to marginal cost.