Find is the firm making the profit-maximizing decision

Reference no: EM13213681

In a competitive market, the market-determined price is $60. For a typical firm producing 100 units of output, short-run marginal cost is constant at $65, average total cost is $95, and average fixed cost is $30. Is this firm making the profit-maximizing decision? If not, what should it do? No, it is not making the profit maximizing decision. In the short run, it should reduce its rate of production until its marginal cost is equal to $60. Yes, it is making the profit-maximizing decision. No, it is not making the profit maximizing decision. In the short run, it should increase its rate of production until its marginal cost is equal to $60. No, the firm is not making the profit maximizing decision. It should shut down in the short run to minimize losses.

Reference no: EM13213681

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