What is the shutdown rule for a perfectly competitive firm

Reference no: EM13202369

1. What is the profit maximizing rule for firms? Explain why it makes sense. For a purely competitive firm, price equals marginal revenue. What is the profit maximizing rule for purely competitive firms? Can you see why, if price is set by the market, and the firm's marginal cost curve slopes up as a function of quantity, this rule tells the firm which quantity to produce in order to maximize profits?

2. What is the shutdown rule for a perfectly competitive firm? Can you think of a situation where a firm loses money but it still makes sense for it to continue operating?

Reference no: EM13202369

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