Answer to Question #210946 in Microeconomics for Momin ali

Question

How a competitive firm does determine its profit maximization level of output? Explain. Also 

discuss when it will decide to shut down and exit?

Answer 1

A competitive firm determines its profit maximization level of output where marginal revenue is equal to marginal cost

The firm will decide to shut down and exit if its product price is less than its average total cost because it will be operating on a loss.