When is production profitable according to price-taking firm, Managerial Economics

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When is production profitable according to price-taking firm at profit, break-even or loss?

Production profitable at profit, break-even or loss:

a. When TR > TC, in that case the firm is profitable.

When market price exceeds minimum average total cost, then the producer is profitable.

b. When TR = TC, then the firm breaks even.

When the market price equals minimum average total cost, in that case the producer breaks even.

The break-even price of certain a price-taking firm is the market price at that this earns zero profits.

c. When TR < TC, in that case the firm incurs a loss.

When market price is less than minimum average total cost, then the producer is unprofitable.


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