Assume a firm is currently producing 800 units of output,P = $10,MC = $10,ATC = $8,and AVC = $6.In this case,the firm is maximizing its profit,which equals $1,600.

Question

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The firm is maximizing its profit because the price (P) equals the marginal cost (MC), which is a condition for profit maximization. The profit is calculated as (P - ATC) * quantity, which equals ($10 - $8) * 800 = $1,600.

Assume a Firm Is Currently Producing 800 Units of Output,P