Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 13.2, Problem 2QQ

How does a competitive firm determine its profit-maximizing level of output? Explain. • When does a profit-maximizing competitive firm decide to shut down? When does it decide to exit a market?

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3. Show in a graph a situation when a competitive firm will minimise loss in the short run. Why will the firm continue operation despite making a loss? When will the firm shut down its operation in the short run?
2- What is the general decision rule used by perfectly competitive firms to maximize profits? On a graph, indicate the long- and short-run supply curves of the firm. Explain clearly why there is a difference. Why would a firm stay open and take losses in the short-run?
3. Why a competitive firm is price taker? Explain graphically why perfect competition is preferable to consumers?
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