Consider a perfectly competitive firm that is producing a level of output such that price equals average total cost and average total cost is less than marginal cost.In order to maximize its profits,the firm should

Question

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When marginal cost is greater than average total cost, the firm is producing at a level where increasing output would increase costs more than revenue. Therefore, to maximize profits, the firm should reduce output.

Consider a Perfectly Competitive Firm That Is Producing a Level