A competitive firm operating in the short run is producing 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

Quizplus · Accepted Answer

The firm should continue to produce more output until marginal revenue (MR) equals marginal cost (MC), since producing an extra unit brings in more revenue than it costs to produce. In this case, MR is greater than average total cost (ATC), which means that each additional unit produced contributes more to the firm's profit than its cost. Therefore, the firm should increase its output to maximize its profits.

A Competitive Firm Operating in the Short Run Is Producing