In a perfectly competitive industry the market price is P12. A firm is currently producing 50 units of output, average total cost is P10, marginal cost is P15 and average variable cost is P7. At which stage the firm is currently operating? Shall it continue its operations? Is the firm maximizing profits? Why or why not? If not, what should the firm do?

In a perfectly competitive industry the market price is P12. A firm is currently producing 50 units of output, average total cost is P10, marginal cost is P15 and average variable cost is P7. At which stage the firm is currently operating? Shall it continue its operations? Is the firm maximizing profits? Why or why not? If not, what should the firm do?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section: Chapter Questions

Problem 2QP

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