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Firm decision for output

Firm decision for output - Profit Maximizing(or loss...

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Economic Context Assume Competitive Market o Standardized Product o Firm output small relative to total market output (small market share) o Low barriers to entry Marginal Revenue Additional revenue received by selling another unit of output Change in Revenue / Change in Output
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Unformatted text preview: Profit Maximizing (or loss miimizing) Output Rule: • Produce output until the last unit where MR > MC • This rule always generates the best economic outcome for a firm • Can determine on graph when making a profit when MR is above ATC...
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