To maximize profits,a competitive firm will seek to expand output until

Question

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A competitive firm will seek to expand output until price equals marginal cost because at that point they are producing at the most efficient level and any additional production would result in costs exceeding revenue, thus reducing profits. Total revenue equaling total cost or the elasticity of demand equaling 1 do not necessarily indicate maximized profits for the firm.

To Maximize Profits,a Competitive Firm Will Seek to Expand Output