A competitive firm operating in the short run is producing at the output level at which ATC is at a minimum.If ATC = $8 and MR = $9,to maximize profits (or minimize losses),this firm should:

Question

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If the firm's marginal revenue is greater than its average total cost (MR > ATC), then it should increase its output to maximize profits. In this case, MR is greater than ATC, so the firm should increase its output. This would allow the firm to increase its total revenue by selling more units and the marginal revenue earned from each additional unit sold is greater than the average cost of producing that unit. This will increase the firm's profit.

A Competitive Firm Operating in the Short Run Is Producing