Profits of a price taking firm
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Why are the profits of a price taking firm maximized when it produces a level of output where price is equal to marginal cost?
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This solution is comprised of a detailed explanation to answer why are the profits of a price taking firm maximized when it produces a level of output where price is equal to marginal cost.
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Comparing total cost and total revenue is one way to find the profit-maximizing rate of output. A second and more revealing way is to use marginal revenue and marginal cost. Marginal revenue is the change in total revenue divided by the change in ...
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