Draw the firms short-run supply curve

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Maximizing the Profit Margin? According to the marginal principle, the firm should choose the quantity of output at which price equals marginal cost.

A tempting alternative is to maximize the firm s profit margin, defined as the difference between price and short-run average total cost.

Use the firm s short-run cost curves to evaluate this approach. Draw the firm s short-run supply curve and compare it to the supply curve of a firm that maximizes its profit.

Reference no: EM131145625

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