The rule established for short-run profit maximization guarantees that a firm that follows it will earn economic profits.

Question

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The rule for short-run profit maximization is to produce at the output level where marginal revenue equals marginal cost. However, it does not guarantee economic profits since the firm may still incur fixed costs that need to be covered. If the price is not high enough to cover all costs, the firm may incur losses.

The Rule Established for Short-Run Profit Maximization Guarantees That a Firm