Assume the price in the competitive market is $10, the average total cost is $8 and the marginal cost is $12 should the firm increase, or decrease or hold output?
P=$10
ATC= $8
MC=$12
Because P<MC , so the firm should decrease its output in order to maximize profit because the profit maximizing condition is where P=MC.
Assume the price in the competitive market is $10, the average total cost is $8 and...
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